George Grundy unpacks UniSuper's significant investments in coal and fossil fuels, questioning whether this aligns with its member's interests.
AS THIS SUMMER'S devastating fires have finally brought climate change to the centre of Australian public discourse, universities have found themselves at the forefront of the response. Australian universities employ climate change professors and researchers, and offer bachelors, masters and PhD courses that engage with a wide variety of climate change impacts.
From a research perspective, climate change has been in the mainstream for some time, but when the Federal Government ignores the evidence science becomes political and universities have found themselves in the spotlight.
In February over 270 scientists, many of them university-based, wrote an open letter to Australia’s leaders urging them to take action and reduce greenhouse gas emissions. A number of professors have used their knowledge of climate science to criticise the Morrison Government for its inaction.
Yet these same people may, perhaps unwittingly, be investors in the very industries that they warn are the primary causes of climate change.
450,000 people working in higher education and research have their superannuation managed by UniSuper, one of Australia’s largest super funds with around $85 billion in net funds under management.
Recent reporting by Charlotte Grieve in the Sydney Morning Herald revealed that UniSuper has nearly $8 billion invested in a variety of fossil fuel assets, including $170 million spread across fourteen thermal coal companies.
It’s an incongruous mix, one that might not survive the glare of attention were these investments more widely known. Given how inappropriate it would seem for Australia’s great homes of learning and research to invest – however unknowingly – in the very industry that drives climate change, it’s worth considering why the university community doesn’t have a super fund that holds no carbon energy assets.
The problem with super is that it doesn’t command the attention. Super isn’t sexy. Unless you’re approaching retirement age, super can appear to be off in the ether, years or perhaps decades from becoming something worth worrying about.
Since John Howard’s Government raised the mandatory employee contribution rate to 9%, Australian superannuation has grown to become an investment leviathan. It’s now the fourth-largest national pension fund on earth, with a total A$2.9 trillion in assets. By comparison, the total market capitalisation of all stocks on the ASX is around A$1.9 trillion.
Following the 2019 banking Royal Commission, many Australians moved their superannuation away from the retail sector into not-for-profit funds. As a result, not-for-profit and industry funds are growing in size and power. The industry is consolidating: six super funds now manage over $50 billion each. Yet despite "choice of fund" rules now offering a wider array of options, the majority of Australians still put their super into the default industry fund of their employer.
Because of this, nearly half a million Australians working in higher education and research find themselves, via their superannuation, asset holders and investors in the fossil fuel companies that many blame for the climate crisis.
To be clear, UniSuper is far from an outlier. Grieve’s report outlined how four of the biggest super funds in Australia have billions invested in coal and other fossil fuels, despite often publicly claiming support for ethical investment and emissions reduction. These include Hostplus, whose membership base is the hospitality and tourism industry and HESTA, which serves the healthcare and community services sector.
After a fire season in which public health and tourism have both been front-page news, it seems fair to ask why super funds representing workers in healthcare and tourism are still investing in coal, oil and gas.
Although some funds claim share ownership allows them to influence corporate behaviour, it’s hard to find a single example of fossil fuel companies reacting to pressure from a super fund and changing course.
In a recent statement, UniSuper said that for ‘most members, they’re either comfortable with our approach and/or they’re uncomfortable with losing out on potential upside’ through fossil fuel investments. UniSuper has claimed to be responding to members concerns by offering seven "ethical" investment options, but these too seem questionable.
In the "sustainable, high growth" superannuation package, the second-largest Australian shareholding is Sydney Airport, hardly a bastion of green values. Members choosing a more ethical investment strategy still find themselves investing in mall management and real estate funds, businesses with little relation to environmental concerns.
As Michael Zyphur, an Associate Professor at the University of Melbourne told me, “both the ‘sustainable high growth’ and the ‘sustainable balanced’ funds have [shares in] Rio Tinto”. Zyphur describes the sustainable practices of companies invested in by "ethical" funds offered by Unisuper as "highly questionable".
UniSuper says it’s ‘passionate about securing the future’ for people ‘shaping a better tomorrow’. They say they are a ‘responsible investor’, carefully considering ‘the environmental, social and governance factors of every company we invest in’ and looking at a number of ‘key factors’ including ‘climate risk management’ before investing.
It is unclear how investing in fourteen coal mines is consistent with factoring "climate risk management" into investment decisions.
The Australian university sector employs around 130,000 full-time staff with 1.4 million students, contributing approximately $140 billion to the economy. Numbers like that (backed by scientific research) pack some clout and offer universities the opportunity to be at the vanguard of climate progressivism.
In addition, the organisations, statutory bodies and union that represent the university community are all in a position to wield influence. Yet many seem reticent to get involved and it’s not hard to see why.
When contacted, Universities Australia (the peak body for Australian universities) CEO Catriona Jackson issued a statement that failed to comment on the appropriateness of Unisuper’s fossil fuel investments.
The board of UniSuper contains two directors nominated by the vice-chancellors of shareholder universities – the nominees are normally themselves university vice-chancellors. Indeed, nearly all of UniSuper’s board members are currently senior officials at Australian universities.
The prestige, power and income of a UniSuper board position presents a clear conflict of interest to someone also representing a university and its staff, so it’s unsurprising that when contacted none of the 25 presidents and vice-chancellors of Australia’s top universities offered any substantive critique of UniSuper’s investment strategy.
Since Unisuper is entirely owned by the universities, they collectively have the power to demand change, but although every university proudly touts its environmental policies, it seems these institutions are talking the talk but not walking the walk.
Which leaves the union, advocacy groups and Unisuper’s members, and it’s here that there is some progress.
The National Tertiary Education Union (NTEU) has ‘Climate Change is Union Business’ on the homepage of their website. Communications Officer Michael Evans says that the NTEU supports divestment campaigns and thinks Unisuper should divest.
NTEU is about to launch a campaign aimed at divestment at both Unisuper and all Australian universities.
More progress is being made by Market Forces, an environmental advocacy group whose open letter to UniSuper has been signed by over 10,000 fund members. The letter demands UniSuper divest of all fossil fuel assets by 30th June, 2020.
The group publishes a spreadsheet rating all Australian superannuation funds environmental performance. "Unisuper Balanced" is among the worst of the major funds, with just 1% of published investments rated "fine". The fund has no fossil fuel exclusions, is not calling for alignment with the Paris Climate Accords, has a 0% climate voting record and no published scenario analysis for dealing with global warming.
Change in the air in Australia. In February, a full-page advert was placed in the Financial Review that called for UniSuper to divest. Plans to drill in the Great Australian Bight have been shelved. The banks are reluctant to attract unwelcome publicity by lending to coal mine magnates.
No less than Malcolm Turnbull has described the future as "catastrophic" if Australia doesn’t move to net zero emissions by 2050. The annual Universities Australia conference in Canberra is now the scene for mass protests by academics and students. Even famously voracious Goldman Sachs have said they will no longer invest in coal.
UniSuper’s investment strategy is untenable and it seems only a matter of time before the fund has no option but to begin to divest. Australia’s superannuation funds have flown under the radar when it comes to ethical investment scrutiny. That time appears to be coming to an end.
UniSuper declined to comment on this story.
George Grundy is an English-Australian author, media professional and businessman. He currently maintains the political blog americanprimerweekly.com, providing informative and entertaining commentary on major events in politics and sport.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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