UniSuper cuts its fossil fuel exposure but climate activists want more

UniSuper has reduced its fund’s economic exposure to fossil fuels from 2.8 per cent last year to 2.3 per cent but that’s not enough for environmental lobby group Market Forces.

UniSuper chief investment officer John Pearce.

The $120bn pension fund UniSuper has reduced its economic exposure to fossil fuels to 2.3 per cent of the fund, down from 2.8 per cent last year, it said in its latest climate report.

Most so-called “look through” exposures – based on the disclosed fossil fuel revenues by the companies in which it invests – are to the oil and gas industry, followed by fossil fuel electricity generation and thermal coal.

“As with our previous reports, this edition of our climate risk and our investments report demonstrates our efforts to continually improve our climate risk assessments and reporting,” UniSuper chief investment officer John Pearce says in the report.

UniSuper has been pressured by climate groups to fully divest its holdings in oil and gas majors such as Santos and Woodside, and earlier this year the fund controversially removed pages from last year’s climate risk report that estimated the emissions of its various investments.

“In relation to the carbon footprint, whichever way one looks at it, there is obviously a very long way to go in order to achieve net zero,” Mr Pearce said.

“We expect that over time, adoption of standard reporting will be compulsory for companies, thus enabling a comprehensive and robust set of reporting standards for funds.”

The fund said that companies representing more than 80 per cent of the fund – based on its look-through calculations – already had set a net zero target. A further 7 per cent had committed to material reductions, it said.

The report called out CSL, Resmed and The Lottery Corporation for not having a net zero target, and said Rio Tinto, South32 and BHP Group were the top three contributors to the carbon intensity of its portfolio.

The reported scope 1 and scope 2 carbon emissions of its listed equity and corporate bond portfolio totalled 33t per million invested. That compared with 29t per million from companies in the MSCI World Index, and 74t in the ASX 300.

“It’s great to see UniSuper reducing its shares in fossil fuel companies, in line with growing demands by members,” Market Forces campaigner Brett Morgan said.

“Companies like Woodside and Santos are still expanding oil and gas and UniSuper must now impose the ultimate sanction by dumping all of its shares in these climate wreckers.

“UniSuper could set a standard for other financial institutions by publicly denouncing the reckless oil and gas expansion plans of Santos and Woodside and divesting its remaining shares.”

Mr Pearce has defended the fund’s position in the past, saying that its holding in Santos is too small to enable effective engagement with the company, that divesting its stake “would not solve any problems” and that there would still be a need for fossil fuels in the energy transition.

Originally published as UniSuper cuts its fossil fuel exposure but climate activists want more