A new campaign pressuring $50 billion industry super fund Hostplus to commit to a net-zero target and to scrap fossil fuel investments could clash with its investment chief.
Climate activist group Market Forces has teamed up with Hostplus members and Australian Olympian Rhydian Cowley to call for climate action from the fund – including a net-zero emissions target across its portfolio and divestment from gas, oil and coal companies.
In the Hostplus Divest campaign launched on Friday, the fund has been labelled a “climate laggard” and contrasted against six of the 10 largest industry super funds that have pledged to reach net-zero emissions by 2050.
According to Market Forces, Hostplus’ top 100 Australian equities list shows the fund has $1 billion of members’ money invested in some of the country’s largest fossil fuel players, including Woodside, Santos, Origin, AGL and BHP.
But the fund has claimed to have embedded responsible investment fund-wide, incorporating environmental, social and governance (ESG) factors into its decision-making and using active ownership.
It has also nodded to climate change as an investment risk, with its website stating the trustee uses stress testing to inform its strategy and “climate change risks are taken into account to the extent they are relevant to the fund’s overall investment strategy and investment portfolio”.
A spokesperson for Hostplus stated the fund agrees climate change risk is “relevant to Hostplus’ investment strategy, governance and its management of its investment portfolio”.
At its most recent annual member meeting in December, Hostplus declared it has been considering its climate change policies as part of a review that has been underway for some months. The outcome of the assessment will supposedly be shared in the near future, the fund’s spokesperson said.
‘Climate change activists’ focus on divestment ignores… reality’
Where Hostplus may conflict with the Market Forces’ call to dump fossil fuels is its preference for corporate engagement over divestment – with the exception of certain sectors such as the manufacturing and distribution of controversial weapons.
“Our policy is to retain exposure to a broad range of sectors and seek to create change within companies through engagement, rather than divest from a company or sector and lose influence,” the fund’s website stated.
Hostplus chief investment officer Sam Sicilia has also publicly argued that dumping fossil fuel shares would be a waste of time, because they would be bought by other investors and the companies would feel no real impact.
“For investors to divest, other investors must buy. If public financial institutions withdraw funding, private capital syndication steps in,” he tweeted in February last year.
“Climate change activists’ focus on divestment ignores the reality of our fossil fuel dependency, which is unlikely to change anytime soon.”
But Will van de Pol, Market Forces asset management campaigner has rejected the Hostplus lean towards leveraging its ownership.
The companies that Market Forces has demanded Hostplus divest from include Origin Energy, AGL, BHP, Whitehaven Coal, Woodside Petroleum and Santos – entities that make up less than 10 per cent of the ASX 300 by market cap, Mr van de Pol commented.
“It’s a small group of companies that are actively undermining climate action and divestment is really the appropriate strategy now that engagement has failed,” he told InvestorDaily.
“After years of engagement from Hostplus and other investors, fossil fuel companies continue to new projects that are incompatible with a stable climate future. The time has long passed for Hostplus to recognise that engagement has failed and start investing members’ money in line with their values.”
Further analysis from Market Forces has found such resources companies such as BHP and Woodside have undermined the climate goals of the Paris Agreement by expanding the scale of the sector and relying on scenarios incompatible with the target to justify business prospects.
Hostplus ‘needs to listen to its members’
According to Mr van de Pol, Hostplus members have already been contacting the fund to raise the fossil fuel investment issue through the Market Forces website, particularly through 2020.
The new campaign, which was launched due to member demand for a divestment push, is a petition of sorts: individuals can add their name and choose to send a personalised message directly to Hostplus.
It has also taken place despite Hostplus being a signatory to the Principles of Responsible Investment (PRI) and offering a Socially Responsible Investment (SRI) option for its members.
Interestingly, the SRI option as at 30 September had holdings in local resources giants such as Rio Tinto, Santos, Woodside and BHP.
But superannuation funds could face the ire of members if they do not match expectations around climate investing – a lesson learned by the sector when retail industry fund REST settled a lawsuit last year for failing to consider climate risks.
“Even if Hostplus is determined to ignore the science and the financial regulators, it needs to listen to its members,” Mr van de Pol said.
“As the default super fund for the hospitality, tourism and sports industries, Hostplus’ members want to see their fund investing in a clean, renewable future that protects the places and activities they love, not the polluting industries of the past.”
Market Forces has rolled out the latest campaign a year after it applied pressure to UniSuper, in a similar divestment push.
The effort, backed by more than 10,000 academics, demanded the fund drop its investments in thermal mining companies and commit to a net-zero emissions portfolio by 2050.
Since then, UniSuper has committed to the net-zero goal and to use its sway to influence companies, but Market Forces has criticised the fund’s moves, claiming its emissions plans have loopholes “big enough for an oil tanker to sail through”.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
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