It invests 12% of its funds - one in every eight dollars - in companies involved in fossil fuels. Half of that, 6%, is invested “directly related to fossil fuel exploration and production business activities.”
6% of UniSuper funds in fossil fuels
It points to three investment options specifically designed for “members wanting to avoid fossil fuels”. They are Sustainable High Growth, Sustainable Balanced, and Global Environmental Opportunities.
The second-largest holding in that fund (after SolarEdge Technologies Inc) is Digital Realty Trust Inc, a data centre provider that sourced 39% of its energy from renewable sources in 2016, but only 30% in 2018.
UniSuper defends these investments by saying it pushes for climate action by engaging with the companies in which it invests. However, its responsible investment reports suggest it voted in favour of few if any climate change-related shareholder resolutions at Australian company meetings.
University staff have fewer choices than most
It would be tempting to suggest that if UniSuper members don’t like UniSuper’s investment choices they can leave.
But UniSuper is unusual among super funds. Most members are tied to it. Enterprise bargains have made membership of UniSuper compulsory for employers of institutions such as the University of Western Australia.
Other universities effectively bar employees from choosing other super funds without formal restrictions. UniSuper is the default fund into which new employees are automatically funnelled.
It runs one of Australia’s last remaining defined benefit schemes, in which retirement benefits are related to years of service and salary rather than the accumulation of funds invested, and in which the investment of funds is particularly opaque with regard to climate change.
But they’re not powerless
The more that UniSuper members sign up to it, the less room there will be for UniSuper to claim it is serving members interests.
University staff members can approach their UniSuper Consultative Committee about investments, and union members can lobby the National Tertiary Education Union to include more other super funds in enterprise agreements.
And many UniSuper members are actually able to transfer their funds to other super funds (or at partially - it’s harder than for most funds). UniSuper provides a fact sheet explaining how to do it.
Investment decisions matter
The threats posed by climate change to investment returns and standards of living in retirement are real.
The umbrella organisation for the world’s central banks says climate change is likely to cause the largest economic dislocations ever seen and could bring about dramatic drops in the value of portfolios, including a 25% reduction in global GDP growth.
It concluded that 2°C would have the least damaging effect on portfolios, and that fund managers, motivated by the economic and social interest of their beneficiaries, had the opportunity, “arguably the obligation”, to use their investments to help bring about this more economically-secure outcome.
We agree, there is no retirement on a dead planet.
- ^ dump (www.afr.com)
- ^ Net Zero by 2050 (www.hesta.com.au)
- ^ net zero (theconversation.com)
- ^ UniSuper (www.unisuper.com.au)
- ^ A$82.2 billion (www.apra.gov.au)
- ^ here (www.unisuper.com.au)
- ^ 12% (www.unisuper.com.au)
- ^ 6% (unisuperdivest.org)
- ^ set targets around emissions (www.unisuper.com.au)
- ^ Sustainable High Growth (www.unisuper.com.au)
- ^ Sustainable Balanced (www.unisuper.com.au)
- ^ Global Environmental Opportunities (www.unisuper.com.au)
- ^ There's more to super fund HESTA's divestment than ethics (theconversation.com)
- ^ SolarEdge Technologies Inc (www.solaredge.com)
- ^ Digital Realty Trust Inc (www.digitalrealty.com)
- ^ 30% (www.digitalrealty.asia)
- ^ responsible investment reports (www.unisuper.com.au)
- ^ University of Western Australia (www.hr.uwa.edu.au)
- ^ first two years (www.unisuper.com.au)
- ^ collectively (www.researchgate.net)
- ^ social media campaign (unisuperdivest.org)
- ^ Market Forces (www.marketforces.org.au)
- ^ What limits shareholder activism as a force for good: the free-rider problem (theconversation.com)
- ^ UniSuper Consultative Committee (unisuperdivest.org)
- ^ National Tertiary Education Union (www.nteu.org.au)
- ^ fact sheet (www.unisuper.com.au)
- ^ largest economic dislocations ever seen (www.bis.org)
- ^ 25% (www.ngfs.net)
- ^ Mercer (www.mercer.com)
Authors: Adam Barsky, Associate professor of Management, University of Melbourne