Investors need to work with fossil fuel firms, says AustralianSuper CEO Paul Schroder

AustralianSuper chief executive Paul Schroder says he is not prepared to sell out of emissions-intensive companies and sectors.

AustralianSuper chief executive Paul Schroder at the ASIC annual forum in Sydney. Picture: Britta Campion

AustralianSuper chief executive Paul Schroder says he is not prepared to sell out of emissions-­intensive companies and sectors.

Mr Schroder, who runs the ­nation’s largest super fund, told the Australian Securities & Investments Commission conference on Thursday he believed investors needed to work with fossil fuel companies to help them transition to lower carbon outputs.

He said selling out immediately would only mean less reputable investors bought shares in the companies, which could lead to a worse outcome. “There is a group of ­people who say we should avoid investing in fossil fuels whatsoever, and there are a group of ­people who say that whatever we do, make us as much money as we can,” he said. “What we have to do, as responsible and prudent trustees, is to chart that course which builds people’s balances in a responsible and sustainable way.”

He said the only sector that AustralianSuper screened against was tobacco, an industry that he said had no benefits.

He said if AustralianSuper members did not want to invest in emissions-intensive sectors, they could choose an investment option that screened them out.

“The transition to net zero is definitely going to happen and it will probably happen faster than people think,” he said. “If you are going to get there, you need to have secure power if you are going to turn the lights on.”

“We need to redirect the earnings of the current fossil fuel industries to renewable industries.

“If that doesn’t happen in a stable, considered way, with long-term investors pushing them to move faster, it looks very unreliable and unstable.

“We are completely committed to net zero by 2050.

“We will push companies as hard as hell about the credibility of their plans and the speed with which they are going to [reduce their carbon emissions].”

Mr Schroder, whose fund has 2.9 million members, said one of the big challenges facing the sector was the increasing numbers of people who were retiring.

He said there was a need for new regulations that would allow funds to turn the same accounts that had been in the accumulation phase into automatic payments accounts for members when they retired. He said there was also a need for the sector to move away from paying out retirees with a lump sum and towards providing easier options for them to change their existing savings accounts to ones that became “automatic income” accounts.

He said there were 3.9 million Australians already in retirement, with another 3.5 million expected to retire in the next few years, and only 15,000 financial advisers.

Separately, Mr Schroder said the fund now had 1380 people managing the money of its members, including 19 in New York.

However, markets would be more volatile and difficult to navigate in the short term, he said.