UniSuper’s first steps on oil and gas divestment
20 August 2021
UniSuper’s latest Climate Risk and Our Investments report has revealed the fund has been quietly pulling investments from oil and gas producers. It has significantly sold down its stakes in climate-destructive companies like Woodside, Oil Search, Santos and Enbridge. The fund halved its investment exposure to fossil fuels over the past year, equating to well over $2 billion being pulled from the sector in a year.
The fund now has no pure-play (undiversified) fossil fuel producers listed in its top 50 Australian holdings, and it appears any remaining exposure to these companies is only through passive investments. UniSuper does, however, retain significant investments in BHP and South32, which are diversified mining companies with significant fossil fuel activities, and APA, a gas pipeline company with big expansion plans.
Like thermal coal before it, UniSuper has seen the writing on the wall for the oil and gas sector. This latest move should be seen as a vote of no confidence in oil and gas producers, which continue to pursue rampant expansion in the face of clear science telling us the industry must rapidly decline if we are to avoid the worst impacts of climate change.
The IPCC’s recent Sixth Assessment Report presented a sobering look at the dire state of the climate, making clear the scale and pace of action required to avoid the most devastating impacts of global warming. According to the report, every fraction of a degree of further warming will see increasingly severe and prolonged heatwaves, droughts and extreme rainfall events, with devastating impacts on humans and ecosystems.
Meanwhile, the International Energy Agency’s Net-Zero Emissions by 2050 report has given us the best insight yet of the energy transition required to give us a fighting chance of limiting warming in line with the Paris Agreement’s climate goals and avoiding some of the worst climate change impacts.
UniSuper’s fossil fuel sell-down represents significant progress in the campaign calling on the fund to divest from all companies expanding the scale of the fossil fuel sector, and reward for the efforts of the 15,000 members that have joined the campaign so far.
But the job isn’t done yet. UniSuper must confirm this divestment from fossil fuels is a one way street, and that it will not be actively reinvesting members’ money in the likes of Woodside and Santos.
The fund also continues to endorse the greenwash of many of its remaining portfolio companies. UniSuper’s report claims the vast majority of portfolio companies have made ‘Paris-aligned commitments’. Yet many of these companies have climate plans and targets that are nowhere near Paris-aligned, if they have them at all.
Use this form tell UniSuper it must now:
- Publicly confirm the fossil fuel companies it has sold down and make a firm commitment to not actively reinvesting in these companies;
- Set clear targets to phase out all exposure to fossil fuels, including passive investments; and
- Step up its expectations of portfolio companies, demanding short- medium- and long-term targets that cover their entire value chain, rather than giving green ticks to inadequate climate plans.
This page contains factual information that is not intended to imply any recommendation or opinion about a financial product.
Key takeaways from the report
- UniSuper’s ‘look-through’ fossil fuel exposure has halved over the past year, continuing a trend since 2019
- Significant drop in exposure to Australian pure-play oil and gas producers Woodside, Santos, and Oil Search
- Woodside and Oil Search have dropped out of UniSuper’s list of ‘portfolio companies’, meaning they’re no longer in the fund’s top 50 Australian holdings, and exposure to these companies appears to only be through passive investments (as per website definition of ‘portfolio companies’)
- Now no Australian pure-play oil and gas producers in list of ‘portfolio companies’, and just one diversified oil and gas producer, BHP
- “Our investment in fossil fuel explorers and producers has reduced over the last year… driven by various considerations, including emerging global energy trends, increased financial risks and our assessment of value.”
- Significant drop in exposure to APA, although holding is still large. APA is planning to expand its gas pipeline network, including a project that would unlock Santos’ Narrabri gas project, which is vehemently opposed by Gomeroi Traditional Owners, farmers and climate experts. This APA investment appears inconsistent with UniSuper’s Santos divestment, given APA is so closely connected to Santos’ expansion plans.
- Table of fossil fuel exposures suggest complete divestment from Enbridge and TC Energy, although comment on page 13 states UniSuper “sold most of our holdings” in these companies
- Fund recognised “…the threat from decarbonisation is increasing and [Enbridge and TC Energy] do not have an obvious pathway to Paris alignment.”
- Will be placing an effective cap on fossil fuel exposure, but won’t disclose it until next year’s climate risk report
- Started implementing a carbon price of USD $50/t in analysis of some companies, but not necessarily using that to make investment / divestment decisions yet
- While pure-play fossil fuel producers have been removed from portfolio companies, many companies on the list are getting green ticks for ‘Paris-aligned commitments’ despite having near- and medium-term plans and targets that are nowhere near Paris-aligned, if they have them at all.
- Eg. Rio Tinto – target to reduce emissions by 15% from 2020 to 2030
- BHP – target to reduce emissions by 30% by 2030
- Big banks – none have fossil fuel lending targets / commitments in line with Paris, other than in relation to thermal coal
- Note UniSuper’s own statement that emissions need to be reduced by at least 45% by 2030, while the latest climate science suggests cuts need to be much deeper
[1/3] The latest edition of @UniSuperNews' Climate Risk Report shows the fund halved its investments in fossil fuel companies over the last year, significantly cutting its stakes in dirty companies like @WoodsideEnergy @OilSearchLtd @SantosLtd https://t.co/N1rA4P3BXf
— Market Forces (@market_forces) August 19, 2021
Fossil fuel exposure reduction
Table 1: Look-through fossil fuel exposure, by company
|Company||Exposure (%)||Reduction in exposure (%)|
|Ampol Ltd||–||0.1||0.06||–||0.04 (40% reduction relative to 2020 exposure)|
|APA Group||–||1.9||1.09||–||0.81 (43%)|
|BHP Group Ltd||–||0.3||0.22||–||0.08 (27%)|
|Dominion Energy Inc||–||–||0.21||–|
|National Grid PLC||–||–||0.13||–|
|Oil Search Ltd||–||0.2||0.09||–||0.11 (55%)|
|Santos Ltd||–||0.3||0.06||–||0.24 (80%)|
|TC Energy Corp||–||0.2||–||–|
|Woodside Petroleum Ltd||–||0.5||0.06||–||0.44 (88%)|
Sources: 2019 Climate Risk Report (pp. 9-10); 2020 Climate Risk Report (pg. 21); 2021 Climate Risk Report (pg. 27)
*UniSuper did not disclose % look-through exposure to fossil fuels in 2019, but did disclose a total fossil fuel company exposure of 12% (pg. 9) and both total and look-through exposure in terms of $ billion (pg. 10), allowing a calculation of look-through exposure of approximately 6.4%
^In 2020, this comprised of 314 companies with <$100 million invested in each. In 2021, this was for <$50 million invested in each (number of companies unspecified)
Table 2: Total fossil fuel exposure, by fuel
|Exposure (%)||Reduction (%)|
|Nov 2020||Aug 2021|
|Total fossil fuel exposure||5.1||2.55||2.55 (50% reduction relative to 2020 exposure)|
|Thermal coal||0.1||0.08||0.02 (20%)|
|Oil and gas||4.4||1.93||2.47 (56%)|
|Breakdown (fuel type)|
|Electricity Generation||0.5||0.54||Increase of 0.04 (+8%)|
Sources: 2020 Climate Risk Report (pg. 21); 2021 Climate Risk Report (pg. 27)
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