It's time to ask: do you know what your super is really supporting?
Almost every Australian has money in superannuation. With a total of $4.2tn held in super at the end of 2024, ours is one of the world's largest pension markets. That's some serious buying power, and therefore influence, that super funds have. But is that money doing harm or doing good?
Will van de Pol pays close attention to the actions of super funds. As the CEO of Market Forces, he helps hold Australian financial institutions to account for their roles in practices that harm the environment and exacerbate climate change.
'Unfortunately, most super funds don't make it easy for the average punter to wade through the thousands of lines of data to get to the truth,' van de Pol says. To counter this lack of transparency, Market Forces analyses how much Australia's big super funds are investing in the world's biggest climate wreckers.
At the end of 2023, more than $39bn held in the default or largest investment options with 30 of Australia's largest super funds was invested in companies that were driving climate damage with their coal, oil and gas expansion plans, Market Forces research found. However, van de Pol says, it doesn't have to be this way.
The eight largest super funds manage the majority of our retirement savings, and in March 2024 they collectively owned almost 25% of Australian listed shares.
This is our money being invested. And by extension, we have a role in what happens to it.
Alison George is the chief impact and ethics officer at Australian Ethical, a Certified B Corp super fund that believes in steering capital towards companies that are doing good and away from those that aren't. Its ethical charter governs where and how it invests, with guiding principles that align with UN sustainable development goals.
'For most people, it might be difficult to touch those issues,' George says, 'but their superannuation money is one of the things that lets them have some power.'
With so many shares under their control, van de Pol says, Australia's big super funds have significant power to influence how companies act. 'That's where our power comes in,' he says. 'Our power as a collective community that is ensuring that our retirement savings are being used in a way that shepherds our economy to a stable warming outcome and provides a world worth retiring into.'
George says: 'Large investors, like super funds, do have quite a lot of power. As an individual or a shareholder, you don't have the ability to open all the doors that a big investor can. When [large] investors then also collaborate and align around things that matter and work with civil society and not-for-profits, they can take that even further.'
In listed companies, every shareholder typically has the right to one vote per share, so if a super fund holds lots of shares, it may be able to sway a company's decisions. However, shareholders – including super funds – can abstain from voting, allowing choices to be made without challenging them.
Van de Pol says: 'The vast majority of funds are failing to use that power to push polluters far enough and fast enough on climate action. We can see that by the fact that companies are continuing to drive up real-world emissions by pursuing new oil and gas projects.'
Withholding votes against actions such as these, he says, effectively constitutes an endorsement. When members challenge their super funds over fossil fuel investments, the most common response is that the funds are hoping to change big-polluter behaviour from the inside. 'That's awesome and great if they're delivering on that promise, but it is not how we are seeing things play out at the moment.'
Since 2022, Australian funds have been legally required to disclose their investment holdings, including the name, market value and proportion of assets in each portfolio. This information is usually listed on funds' websites, though there's no requirement that they make it easy to find. If you want easy-to-access information, Market Forces research is a good start.
Many of us try to do the right thing about our consumption choices
George says: 'It's important to recognise that it's your money and it's a big choice. Many of us try to do the right thing about our consumption choices. You may as well put it into something that's a big choice that maybe makes a difference.'
George says a lack of clear information from some funds can itself reveal something about their actions. If your fund is making ethical investment decisions, they'll be upfront about it, she says. 'They will want to talk about it, because it's something that they're committing business resources to doing.'
When we start working, our employer has to make super contributions on our behalf, and may use a default fund if we don't nominate one. That means many Australians are put into a fund, and may never have taken a close look at it.
The good news is almost all of us have the right to choose a different fund – and it's easy to switch. Using an analysis tool such as Market Forces or Responsible Returns can help members find out what their super funds are doing and find funds that better suit their ethical positions.
The process of switching is relatively simple. At any time, you can choose to join a new fund and notify your employer so they can pay contributions to your new account. If you have accounts with multiple super funds, you also have the option to consolidate them into a single account. You may want to seek independent financial advice to help with your decision-making.
Van de Pol says the degree and ease of choice should give Australians hope that their super can do good. 'That hope comes from the power that we have as individuals,' he says. 'Collectively, making decisions to align our finances with our values has the power to shift the entire superannuation industry into gear.'
Super funds have an obligation to act in the best financial interests of their members, van de Pol says. 'So, it is really up to all of us to make our voices heard and ensure that that giant multi-trillion-dollar pot of money is held to account and is directed in a way that delivers us a stable and clean world to retire into.'
Learn more about how Australian Ethical can invest your money to help build the future you want for yourself, your family and the world.
This information is general in nature and is not intended to provide you with financial advice or take into account your personal objectives, financial situation or needs. Before acting on the information, consider its appropriateness to your circumstances and read the PDS and TMD at australianethical.com.au. Issued by Australian Ethical Investment Ltd (ABN 47 003 188 930, AFSL 229949)
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