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QSuper sniffs the wind, starts selling off investments in fossil fuel assets

EXCLUSIVE

QSuper has started selling off investments in fossil fuels after it recognised its investments, if unchanged, could contribute to climate change, but also that they were subject to climate change risk.

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It’s a significant move for the fund and its largely public service membership ahead of its merger with Sunsuper to create the nation’s second biggest superannuation fund with about $200 billion in assets.

But it also comes as the energy industry pleads with investors to stick with them and as Prime Minister Scott Morrison faces a struggle to get his coalition partners, the Nationals, to accept a net zero emissions by 2050 policy.

However, QSuper had been facing pressure from its membership. Earlier this year, 141 QSuper members wrote to the fund urging it take climate change seriously and divest from high-emitting assets. Environmental groups have also been pressuring the fund to move and one of them, Market Forces, said QSuper could do a lot better.

The company said future actions would include a commitment to purchase only those new assets that comply with the Paris Accord goals.

QSuper’s chief investment officer and acting chief executive Charles Woodhouse said the strategy “may mean divestment of assets that do not meet our requirements, and it will mean increased reporting to members of our policies and practices relating to climate change’’.

“Our policies recognise that our investments, if unchanged, can contribute to climate change, but also that they are subject to climate change risk,’’ Woodhouse said. 

“They also recognise the transitional risk to the value of some investments as economies and business practices change in a way necessary to reduce the risk to the planet of climate change.

“The carbon footprint of the global listed equities portfolio is now at 85 tonnes of CO2 for every $1 million invested, well below the previous level, and now broadly in line with the accepted levels in global equities portfolios on track for the Paris targets.’’

Woodhouse said the combination of its actions put the fund on a trajectory “to be one of the leaders in managing the risk of climate change for the financial benefit of members over coming years’’.

Woodhouse said the “portfolio rebalancing’’ sent a signal to emitting companies that they had to match accepted global practice if they were to enjoy access to the capital of QSuper and its members.

“Our role as an investor will also send positive signals. Our portfolio already includes renewable energy assets across the planet, and we anticipate that the economic shift required to meet the Paris targets will continue to generate opportunities to invest further in support of both climate change solutions and member outcomes.’’

Market Forces asset management campaigner Will van de Pol said QSuper’s recent climate change update is a step in the right direction from a fund that has lagged many of its peers on the issue, but leaves plenty of room for improvement.

“QSuper must recognise that net zero by 2050 means no new fossil fuels, and take immediate action to stop investing members’ retirement savings in any company that is pursuing new coal, oil and gas projects,’’ he said.

“The fund states the bleeding obvious, saying aligning its portfolio with net zero by 2050 ‘may mean divestment of assets’, but has failed to produce any policy commitment to ensure divestment from the fossil fuel companies that are actively undermining the net zero transition. 

“As well as withdrawing all investments from companies expanding the coal, oil and gas sectors, QSuper must demand other portfolio companies bring their business strategies into line with the fund’s stated climate commitments. This includes improving its lacklustre proxy voting record by supporting climate-related shareholder proposals such as those lodged with the big four Australian banks.’’

 

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