The superannuation industry is in the firing line for its tacit support of resources companies that award bonuses based on new fossil fuel exploration.
A new report by environmental group Market Forces focuses on ‘unburnable’ coal – that is, coal that cannot be burned if global warming is to be kept below 2 degrees.
According to the report, titled Digging Deeper, 15 Australian-listed resources companies have spent $12.69 billion on fossil fuel exploration since July 2012.
A further $14.62 billion has been spent by 10 foreign companies on fossil fuel exploration between 2013 and 2015, said the report.
This exploration is often encouraged through executive remuneration packages, with seven companies in the ASX300 and six foreign companies with major Australian operations engaging in the practice, said Market Forces.
Australian superannuation funds are “failing to effectively challenge this business model” despite a “stated belief” in engagement as a strategy for changing company behaviour, said the report.
“Only eighteen of Australia’s 50 largest super funds disclose their complete proxy voting record, making it difficult to determine which funds are genuine ‘active owners',” said the report.
“Our analysis of twelve funds’ voting records shows only three voted against any Australian-listed energy company’s remuneration package in the last year.”
Major super funds that have supported the remuneration packages of every energy company they held shares in include AustralianSuper, First State Super, MLC and ANZ’s OnePath, said the report.
“Australia’s super funds must have effective engagement policies and practices, and demonstrate how these are being implemented to ensure companies they invest in are compatible with a low carbon future,” said the report.
“An obvious step to demonstrate alignment with the goals agreed to in Paris is for funds to reject fossil fuel exploration incentives.”
The Productivity Commission’s final superannuation report missed an opportunity to show how the industry’s pre-tax investment focus is p...
The Productivity Commission’s ‘best in show’ proposal is more likely to benefit industry funds over retail funds, according to new dat...
ASX-listed Link Administration Holdings Limited looks well placed to weather superannuation changes at home and the impact of Brexit in its ...