Are Australia’s Superannuation Funds Contributing to Climate Change?

Updated June 22, 2023

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Balanced investment funds currently comprise around $1 trillion in Australian retirement savings.

By directly accessing the balanced fund holdings from the websites of some of Australia's largest super funds (as provided by APRA), we were able to comprehensively assess their composition.

We compared these holdings with climate change stress test scenarios provided by the Bank of England.

Our findings revealed a mere 8% of portfolios were aligned with a 1.5-degree Celsius climate target.

On the contrary, approximately 90% of portfolios were found to be invested in scenarios that would lead to a temperature increase of 2 degrees Celsius or more.

Most alarming is the fact that some of the largest balanced portfolios are aligned with a 4 Deg C+ world.

Alignment of Largest Superannuation Funds in Australia with Paris Climate Agreement

And if all global investors were to invest in the same manner as Australian super fund managers currently do, it would result in an alarming increase of 3 to 4 degrees Celsius in the average global temperature.

It’s not surprising that Europe is actively establishing sustainable investment standards to significantly intensify the pressure on funds to reduce their investments in climate change.

Likewise, Australian regulators are striving to implement these same standards as quickly as possible.

And as the fastest growing funds in Australia align with the lowest temperature scenarios, the rising demand and recognition for sustainable investment practices will continue to surge.

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