A Year of Climate Action

In Australia we are all investors, thanks to our compulsory superannuation system. And by choosing where we put our super we can direct that investment away from fossil fuels.

Transitioning to a low carbon future will require investment, and one of the few completely fossil fuel free funds – Future Super – point out our superannuation can provide that investment:

Just this week a major international financial institution reported on the massive financial risks from the impacts of climate change, and the potential for stranded assets: fossil fuel investments. So it makes financial AND ethical sense to move your superannuation out of fossil fuels.

Market Forces do excellent analysis of the investment strategies of different superannuation funds, and summarise their findings here.

There are a few options to make your super work for a sustainable future:

1. An increasing number of funds have sustainable investment options within their portfolio, so it is worth investigating whether you can switch within your current fund.
2. If your fund does not have this option, Market Forces have an automated email you can fill out, asking your fund to divest from fossil fuels.
3. Final option, with maximum hassle factor, is changing your superannuation fund.

Market Forces report that only eight funds have comprehensive exclusions from investments in fossil fuels:

• Australian Ethical Australian Shares
• Australian Ethical Balanced
• Catholic Super PositiveIMPACT
• Cruelty Free Super
• Future Super Balanced Impact
• Local Government Super Sustainable Australian Shares
• UniSuper Sustainable Balanced
• Verve Super

Other funds that Market Forces rate relatively highly are:

• ACSRF Socially Responsible Balanced
• Australian Super Socially Aware
• VicSuper Socially Conscious
• WA Super Sustainable Future

Confession: this action is actually a cheat for me, because I have had my super with Australian Ethical since the 90s. (And I have been really happy with them. Until researching this post, I hadn’t compared returns with other super funds but as far as I can tell it seems to be doing OK.)

So this week I am tackling my husband Tim’s superannuation. He is currently with GESB, the Western Australian State Government super fund. According to Market Forces, GESB has a lot of work to do in regards to climate safe investing:

I made some inquiries with GESB about whether it was possible to choose an ethical investment option within the super fund, but the answer was essentially no. I did more research and discovered they had already been targeted by a divestment campaign, and have yet to make any change. I think it is time for Tim to move super funds.

I investigated the options out of the list above that weren’t industry funds (like Local Government or UniSuper) and that weren’t an institution Tim would not support (Catholic Super) or a fund aimed at women (Verve Super). Which left a fairly short list.

I looked at a superannuation fund comparison site to compare returns and fees.

So Australian Ethical has higher fees (but apparently not so different from the industry average) but also higher returns than GESB. WA Super Sustainable Future and Australian Super Socially Aware look good too, with lower fees than Australian Ethical and similar performance to AE. 

I have passed my report to Tim…