There’s Nothing Super About Investing In Dirty Energy

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Universities are at the forefront of climate change research and prevention. But the companies their staff invest in are hurting the cause, writes Jack Bertolus.

Having spread from university campuses in the US to Australian institutions like the Australian National University, the National Tertiary Education Union and most recently La Trobe, the fossil fuel divestment movement is intrinsically linked with the tertiary education sector.

With climate change already putting life, communities and culture at risk, to say nothing of the dire scenarios envisaged by models of future climates, the desperate environmental and social imperative to shift finance away from fossil fuels is clearly not lost on Australian academics. On top of this, financial experts’ repeated warnings of an impending carbon bubble are adding weight to calls for fossil fuel divestment purely on financial grounds.

It is somewhat surprising then that the tertiary education sector’s superannuation fund, UniSuper, continues to invest members’ money in fossil fuels by default. Australian academics, including those researching climate change and its consequences are investing in its causes via their super fund. Imagine spending your professional life working to understand and address an existential threat to humanity, only to have your retirement savings invested in its primary causes?

UniSuper is Australia’s seventh largest superannuation fund, managing approximately $51 billion for more than 385,000 members. Super Switch, a website tracking Australian super funds’ exposure to fossil fuels, estimates at least 7.35 per cent of the value of shareholdings within the Balanced (MySuper) option is invested in fossil fuel companies. This percentage could be greater but for much of the option’s holdings being undisclosed.

According to Super Switch, UniSuper’s holdings include diversified companies with significant coal mining operations such as BHP Billiton, Rio Tinto and Wesfarmers. The fund has also previously disclosed holdings in major fossil fuel companies Santos, South32, Caltex, Origin and AGL.

Most (if not all) of these companies are excluded from UniSuper’s Sustainable option, meaning a small number of highly engaged, financially confident members can limit their exposure to fossil fuels and climate risk. However, The Australian reported UniSuper CEO Kevin O’Sullivan as having said, “a great deal of people across many super funds were generally apathetic about investments” and that “a lot of people leave their money with the fund chosen by their employer, and once they are in, three-quarters of people just choose the default investment option anyway.”

Aside from apathy, members also fail to switch funds or options due to a lack of financial literacy or confidence and a natural aversion to straying from the status quo. Indeed, remaining in a default investment option says more about these factors than members’ appetite for fossil fuel divestment.

In fact, UniSuper agrees members “take a keen interest in ESG [environmental, social and corporate governance] and sustainability related investment issues”. Despite this, O’Sullivan maintains, “it’s up to the fund’s trustee, management, and advisers to consider and decide [what’s best for members] without acquiescing to extreme pressure and campaigning from non-members or from a vocal minority of members.”

This position is particularly interesting when viewed in light of the snap board meeting and resulting promise from O’Sullivan and Chairman Chris Cuffe to remain silent on the proposed royal commission into the banking sector. This occurred in April after an NTEU campaign prompted 2,600 members to contact the fund, calling for O’Sullivan to retract his public opposition to the proposed commission.

In that case it seems a ‘vocal minority’ and ‘campaigning’ were clearly enough to influence the fund’s management. Perhaps the board recognised the reaction represented a broader opinion?

They can rest assured that the broad opinion of their members is that divesting from fossil fuels is important. A Lonergan Research poll conducted in 2014 indicated 67 per cent of Australians would choose a bank or super fund which does not invest in fossil fuels over one that does.

But the idea that vocal minorities can’t have their concerns acted upon is plainly absurd. Given UniSuper’s 385,000 members, can the fund dismiss any group below 192,500 expressing an opinion as a minority? The NTEU campaign suggests otherwise. So how many divestment advocates need to speak up before their concerns are given legitimate consideration?

With a membership so well informed and deeply connected to the devastating risks climate change poses to our environment, communities and economy, UniSuper should arguably be leading the industry on fossil fuel divestment.

But it seems the call for action must reach a deafening pitch before significant steps will be taken – depending on what the issue is, right UniSuper?

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Jack Bertolus

Jack is a Monash graduate of Commerce/Science. He joined Market Forces in early 2015 where he is now Research Coordinator.

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