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Australia's largest superannuation funds have doubled their investments in high-emitting companies over the past two years, according to environmental finance group Market Forces.
The group's latest analysis found that Australia's largest 30 super funds had $39 billion invested in what the group describes as "climate wreckers". In 2021, that figure was $19 billion.
At the same time, clean energy investment from super funds decreased by half a billion dollars to $7.7 billion.
Super funds are required to disclose their investments twice a year, allowing groups to investigate where their money is going.
Market Forces is an environmental advocacy group that focuses its efforts on financial institutions like super funds and banks and tries to stop them from investing in companies that aren't considered climate-friendly.
Superannuation funds campaigner Brett Morgan said despite super funds claiming to support greater climate action, most were continuing to invest in the expansion of fossil fuels.
"Any super funds claiming to support greater climate action must be forcing climate wrecking companies to end their fossil fuel expansion plans and be publicly divesting from them," he said.
"If they fail to do this otherwise, they're greenwashing."
Mr Morgan said Market Forces had already worked with tens of thousands of members to demand their super funds stop investing in fossil fuels.
"What we've seen is many super funds increasing their climate ambition, because of that demand from members," he said.
"Ultimately, super funds are there to serve the interests of their members and so when members come together and demand greater climate action, their super funds will and do listen."
Where is the money going?
This report focused on the default investment offering for the top 30 super funds, and the top three with the biggest proportion of their investments in high-emitting companies were:
- UniSuper - Balanced fund,
- Commonwealth Super Corp's - PSS Default,
- MLC - MySuper Growth.
UniSuper has 11.5 per cent, or $2.22 billion, invested in "climate-wrecking" companies, while Commonwealth Super had $1.17 billion.
On average, less than 2 per cent of a fund's investments was in publicly listed clean energy companies.
The analysis also found most of the investment in new fossil fuel projects went into just three companies: Woodside, Santos and Whitehaven.
"[They] are by far the biggest contributors to those emissions for the average super fund," Mr Morgan said.
"Super funds looking to clean up their members' retirement savings must make Woodside, Santos and Whitehaven their highest priorities."
For example, the report found that the default investment option of Australia's largest super fund AustralianSuper had increased its investment in fossil fuels with a massive buy up of Woodside shares in 2022.
This now means that Woodside makes up 20 per cent of AustralianSuper investment value.
Woodside alone makes up around 20 per cent of the value of AustralianSuper's investments in these "climate wreckers".
Greenwashing crackdown
Superannuation investments have come under scrutiny in recent years as more members look to divest their retirement savings from companies that continue to burn fossil fuels and contribute to climate change.
Regulators are also paying close attention: if super companies are claiming to have sustainable options but investing in dirty companies, it could be considered greenwashing.
Last year, the financial regulator ASIC launched its first legal action for greenwashing against Mercer Superannuation for "allegedly making misleading statements about the sustainable nature" of some of its investment options.
"This is the first time ASIC has taken an Australian entity to court regarding alleged greenwashing conduct, and it reflects our continuing efforts to ensure sustainability-related claims made by financial institutions are accurate," ASIC's deputy-chair said at the time.
Mr Morgan said the crackdown on greenwashing was leading to companies removing their claims, without improving their practices.
"What we've seen is, over the past couple of years, some super funds walking back their public disclosures, appearing to want to avoid scrutiny," he said.
"What we need to see is super funds living up to their climate claims by implementing concrete strategies to phase out their investments in companies that are expanding fossil fuels."