Super funds’ ‘sustainable’ options could be greenwashing: Market Forces

Several superannuation funds are potentially misleading consumers and contravening the Australian corporate regulator’s ‘greenwashing’ advice, according to analysis by Market Forces.

Eight of 11 major super fund investment options labelled ‘sustainable’ or ‘socially responsible’ were investing in companies expanding the fossil fuel sector. The analysis found some ‘sustainable’ options were investing in oil and gas giants Woodside, Santos, BP, Exxon and Shell, while one was invested in thermal coal miners, Whitehaven Coal and New Hope.

The Australian Securities and Investment Commission (ASIC) recently warned that offering or promoting sustainability-related financial products that was not ‘true to label’ or using ‘vague terminology’ could breach misleading and deceptive conduct and/or disclosure rules.

Market Forces’ analysis identified that the eight ‘sustainable’ options captured in the study had some investments in companies listed in the organisation’s Climate Wreckers Index. The index was made up of the 180 publicly-listed Australian and international companies with the largest fossil fuel expansion plans.

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Super fund Mercer, for example, claimed its ‘Sustainable Plus’ options excluded thermal coal companies, yet the ‘Sustainable Plus Growth’ option was invested in Whitehaven Coal and New Hope Corporation, among several other companies expanding the scale of the climate  wrecking thermal coal industry.

In fact, 7.45% of Mercer Sustainable Plus Growth’s listed equities investments were in companies that appeared on the Climate Wreckers Index due to their fossil fuel expansion plans. This was higher than the average of default options Market Forces recently analysed (6.26%).

CareSuper’s ‘Sustainable Balanced’ option had 6.30% of its listed equities in Climate Wreckers Index companies, including the likes of Woodside, BP, Chevron, Exxon, and Shell.

A spokesperson from CareSuper said: "Market Forces’ inclusion of BHP in their analysis skews the data as it belies that a significant proportion of its revenue comes from iron ore and copper, which are both essential to the energy transition. In May, BHP announced the planned closure of its thermal coal operations following a just transition."

"CareSuper has been recognised by Responsible Investment Association Australasia and SuperRatings for our commitment to responsible investing and integrating environmental, social and governance (ESG) factors into all investment processes and decision-making. 

"After making our commitment to net zero carbon emissions across our investment portfolio by 2050 in November 2021, we commenced a detailed consideration of existing holdings as part of an ongoing program of sustainable investment initiatives designed to benefit members over the long term.”

Market Force's analysis revealed other so-called sustainable investment options also had holdings in Woodside Energy, the Australian oil and gas giant pursuing the highly-controversial Scarborough-Pluto project, which independent analysis had confirmed was inconsistent with the climate goals of the Paris Agreement.

“When challenged over their investments in climate wrecking fossil fuel companies, super funds often point members to their ‘sustainable’ investment options, yet some of these products are clearly failing to live up to their labels, as they invest in companies expanding the fossil fuel industry,” said Market Forces campaigner, Brett Morgan.

“HESTA, for example, often refers its climate-concerned members to its ‘Sustainable Growth’ option, yet this option invests in Siemens AG, a company heavily involved in developing new fossil gas power plants that are incompatible with the Paris climate goals.”

“Many members expect climate action to be core business for super funds. These funds need to divest from companies expanding fossil fuels across all investment options.”

The analysis was based on super fund holdings disclosures sourced from each fund’s website, effective as at 31 December 2021.