UniSuper fails to improve on inadequate climate plan.
3 December 2020
UniSuper’s latest Climate Risk Report leaves a gulf in near-term climate action that undermines the fund’s claims of alignment with the goals of the Paris Agreement.
The shortcomings of UniSuper’s climate commitments allow its investments in the oil, gas and metallurgical coal sectors to remain unmanaged, while companies are given credit for long term goals despite having short and medium-term plans that are incompatible with the Paris Agreement’s 1.5°C warming target.
The report confirms UniSuper still has material investments in a number of companies planning to increase fossil fuel production or infrastructure: Woodside, Oil Search, BHP, South32, and APA. UniSuper has provided no strategies or targets to manage down its exposure to these companies.
The fund has also green-lighted the inadequate climate plans of some of Australia’s largest carbon polluters, including Rio Tinto, despite the miner’s interim greenhouse gas reduction target being just a third as ambitious as what the Paris Agreement requires.
You can read our detailed analysis of the report’s flaws at the bottom of this page.
This page contains factual information that is not intended to imply any recommendation or opinion about a financial product.
Some of the further steps other UniSuper members have been taking include:
Divesting from UniSuper to a fossil fuel free superfund
UniSuper provides this guide about rolling over part or all of your account to another super fund. You can see how UniSuper’s approach to fossil fuels compares to other super funds here, and general information about switching superannuation funds here.
Switching to one of UniSuper’s fossil fuel free options
Be sure to tell UniSuper exactly why you are considering switching, and make the point that it shouldn’t be up to members to seek out and switch into a fossil fuel free option – that should be the default position for the entire fund. Please also let us know if you’ve made the switch so we can keep track of the number of members shifting in response to this issue.
Organising support among colleagues, departments and institutions
Members can organise letters and statements of support for the campaign from a large group of colleagues, departments, academic associations, and even entire universities. Please contact us if you’d like some tips on getting started or want to be put in touch with other supporters.
Meeting with a UniSuper representative to voice your concerns
Each university elects up to four representatives to the UniSuper Consultative Committee to be ‘the voice of the members.’ This committee engages directly with the UniSuper board and is responsible for nominating four directors.
Making an official complaint to UniSuper
UniSuper takes complaints seriously and they are fed up to higher management. To make a complaint, visit this page here on the UniSuper website.
Commiting to attend future UniSuper Divest actions
Actions keep the campaign front and centre, engage more potential supporters and allies, and demonstrate to UniSuper that members aren’t going away until they have a plan to divest from all fossil fuel projects.
Publishing an article in The Conversation or another news outlet
Articles are good at keeping the news current and keeping the pressure on UniSuper to divest. They also help build the narrative for why divestment is important, which educates other UniSuper fund members and captures the attention of the UniSuper staff and board.
Requesting a meeting with UniSuper executives or board members
Other UniSuper members have engaged the board by engaging their Vice Chancellor, or requested a meeting with one of the board members on their campus. You can see who is on the UniSuper board here.
Detailed analysis: Major flaws in UniSuper’s climate risk report
Oil and gas exposure
UniSuper’s 2020 climate risk report provides no strategies or targets to reduce investment exposure to companies expanding oil and gas production.
The report states “Our base case for oil and gas growth doesn’t assume growth in the sector” and “investments in fossil fuel producers are likely to decline”. However, UniSuper has failed to account for the scale of oil and gas decline required to meet the Paris climate goals, nor any strategies or targets to manage down the fund’s exposure to these industries in line with that decline.
With the recognition that oil and gas production must decline, UniSuper needs to:
- Stop investing in any company that is expanding oil and gas production; and
- Set targets to reduce the scale of oil and gas reserves owned by companies within the fund’s portfolio.
Failure to take these steps allows UniSuper’s investments to promote oil and gas expansion that is incompatible with the fund’s own stated expectations, indicating a failure to align the fund’s climate risk rhetoric with action.
UniSuper’s only near-term strategy to manage climate risk is to require all material Australian portfolio companies to have “Paris-aligned commitments by the end of 2021”.
On its face, this appears a strong target, and for the first time UniSuper has listed all companies that it applies to.
However, UniSuper’s definition of what constitutes a “Paris-aligned commitment”, and an analysis of some of the companies UniSuper claims are ‘on track’ shows this approach rewards companies for doing nothing more than setting a long-term net-zero aspiration, while continuing to operate outside Paris-aligned carbon constraints in the meantime.
UniSuper defines a Paris-aligned commitment as any one of:
- Net-zero operational emissions by 2050
- A Science Based Target (5-15 years)
- At least 45% emission reduction by 2030
Almost all companies UniSuper’s report marks as ‘On track’ for these commitments have announced net-zero by 2050 goals.
However, by giving credit for any of the above, rather than requiring short, medium and long term emissions targets, UniSuper’s approach does nothing to ensure investee companies act to reduce their contributions to climate change in line with a 1.5°C warming outcome.
This amounts to UniSuper green-lighting companies to talk the talk by announcing long term goals, without having to walk the walk of bringing down emissions in the near term.
Looking at some of the largest greenhouse gas emitters in UniSuper’s portfolio demonstrates the shortcomings of this approach:
- 2019 operational emissions (scope 1 & 2): 26.8 MtCO2-e
- Interim emission target: -15% reduction by 2030
- ⅓ of the emissions reduction UniSuper notes is required across the economy by 2030 in order to align with Paris
- FY2020 operational emissions: 23.3 MtCO2-e
- No current emission targets other than net-zero by 2050
- FY2020 operational emissions: 15.8 MtCO2-e
- Interim emission target: -30% reduction by 2030
- ⅔ of the emissions reduction UniSuper notes is required across the economy by 2030 in order to align with Paris
No action on scope 3 emissions
UniSuper’s commitments also fail to require companies to manage down the emissions generated when their products are used, known as scope 3 emissions. These are particularly relevant for producers of emissions-intensive products such as coal (both thermal and metallurgical), oil, gas, and iron ore (which is processed along with metallurgical coal in the steelmaking process).
The scale of UniSuper’s investee companies’ scope 3 emissions profiles is staggering, representing major exposures to climate change transition risk.* For example, BHP’s scope 3 emissions were 563 MtCO2-e in FY2020, mostly attributable to steelmaking clients processing BHP’s iron ore and metallurgical coal, and the use of BHP’s petroleum products. For a sense of scale, Australia’s total national emissions in 2019 were around 532 MtCO2-e.
Some other major scope 3 emitters in UniSuper’s portfolio include:
- Rio Tinto (494 MtCO2-e in 2019)
- South32 (110 MtCO2-e in FY2020)
- Woodside (27.9 MtCO2-e in 2019)
- Oil Search (10 MtCO2-e in 2019)
Other than Rio Tinto, all of the companies listed above produce fossil fuels. Only setting operational emissions targets fails to account for these products’ lifecycle emissions, and therefore their contribution to climate change and exposure to transition risk.
UniSuper must manage down its fossil fuel exposure by ending investment in any company that is expanding production of coal (including metallurgical coal), oil, or gas, and setting targets to reduce scope 3 emissions and / or fossil fuel reserves in its investment portfolio.
*Transitional risks are the financial impacts that policy, regulatory and market shifts to drive decarbonisation may have on companies and investments.
About this campaign
UniSuper DIVEST is a project of Market Forces, supported by UniSuper members across Australia. The campaign is designed to support signatories to take ownership of the campaign and organise to share it widely among fellow UniSuper members. Together we will take this campaign into the media and right to the doors of UniSuper.
UniSuper DIVEST recognises and supports the important work of the National Tertiary Education Union (NTEU) in pushing for climate action, including motions passed in October 2019 declaring a climate emergency and calling on UniSuper to divest from fossil fuels. This campaign supports these efforts and seeks to demonstrate widespread support for fossil fuel divestment among UniSuper members.
Market Forces’ research has identified the big Australian companies that are undermining climate action by expanding the scale of the fossil fuel industry and whose future is tied to worsening the climate crisis. These are the companies the open letter calls on UniSuper to divest from.
UniSuper should not be investing any of its members’ retirement savings in these climate-wrecking companies. While the fund offers investment options that exclude some fossil fuel investments, these options represent a tiny proportion of assets under management and require members to actively seek out and switch into them. Climate action is effectively quarantined to those niche options and the members that are able to find their way into them. Meanwhile UniSuper continues to invest billions of dollars in fossil fuels through mainstream investment options. UniSuper, as a whole, is still overwhelmingly backing companies that are driving us towards runaway climate change.
This campaign provides a platform for members to demand UniSuper divests from fossil fuel companies that are undermining the Paris Agreement’s goal of limiting global warming to 1.5°C.
Market Forces is an affiliate project of Friends of the Earth Australia. Learn more at marketforces.org.au/about