Clean energy investment is facing headwinds. Could superannuation help?

Winnie Fu, a concerned Australian mother, is reconsidering her super fund, AustralianSuper, after discovering it is the largest shareholder in Whitehaven Coal. She believes that with the world destabilizing, prioritizing clean energy investments is crucial for creating a better future for the next generation, even if it means potentially lower financial returns. Fu argues that a stable society and a livable climate are prerequisites for a good life, regardless of monetary wealth.

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I look at how the world is destabilising around us, I think we need to do everything we can to try and make the world a better place for the next generation.

Fu's sentiment reflects a broader desire among Australians for their retirement savings, totaling $4.5 trillion, to be directed towards renewable energy. However, achieving this ambition faces significant hurdles. An analysis by environmental advocacy group MarketForces revealed that since January 2020, Australia's top 30 superannuation funds have invested only $771 million (0.8%) in renewable energy projects, compared to $99 billion invested in 514 renewable projects overall. Notably, Canadian pension funds have contributed more to Australian renewable energy projects ($1.2 billion) than Australia's top super funds.

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If we do not have a stable society, if we do not have a livable climate, if we have social unrest because there is mass immigration from climate change … we cannot have a good life just because we have more money.

Further analysis by MarketForces also indicated that Australia's leading super funds invested more than three times as much in companies planning fossil fuel expansion than in clean energy companies. Mary Delahunty, CEO of the Association of Superannuation Funds of Australia, stated that 29 of the 30 major super funds have some "exposure" to renewable energy assets, often held indirectly. She emphasized that funds continually seek appropriate risk-adjusted returns for their members, and renewable assets have historically been strong performers.

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A super fund being something that is supposed to help provide for us in the future, I think it is crucial that they look beyond just monetary return.

AustralianSuper defended its investment in Whitehaven Coal, citing the company's production of metallurgical coal, essential for steel manufacturing, and reiterated its commitment to achieving net zero emissions by 2050 within its investment portfolio. While some funds, like Rest Super, have invested in large renewable projects such as Western Australia's Collgar Wind Farm, the general trend shows a gap between stated intentions and actual investment in clean energy. Funds emphasize that investments must align with the best financial interests of their members, a principle that may complicate a rapid shift away from fossil fuels.

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