As more super funds look to target net zero emissions, a lack of a consistent reporting regime could open to door for greenwashing.
Adam Verwey, Future Super co-founder and director, said there was a wide disparity in how super funds were reporting on carbon.
“You might get a graph or the outputs as a number, but you don’t really get to see the information behind it – what carbon are they counting or not counting in their calculations,” Verwey said.
“Lots of super funds are making net zero commitments which is a really good step, but we also need an agreed understanding about what that means.
“If you’re reporting on your emissions as a super fund, rather than the emissions in your portfolio, that could be confusing.
“I don’t think most Australians are thinking too much about the super fund headquarters, they’re really thinking about the finance emissions in their portfolio.”
Verwey said this commitment to net zero meant many super funds would have to figure out how to do it quickly.
“Some of them are going to have to work out how to make a really quick reduction in the amount of finance emissions in their portfolio,” Verwey said.
“The largest and quickest reduction they can make is through removing the 30 or 40 listed fossil fuel companies from their portfolios.
“Super funds have been a bit reluctant to divest from these companies, they’ve continued to invest in fossil fuel companies and just make incremental changes.
“If they really want to meet their net zero carbon commitment, they need to divest from those fossil fuel companies within the next couple of years.”
The fund had found that investors were looking to make investment decisions around financial returns, but also having a liveable planet.
“Evidence in Australia and overseas has shown for many years that companies that have superior ESG [environmental, social and governance] performance also tend to have superior financial performance,” Verwey said.
“Australian and global share markets have increased a lot of the last decade – over 60% returns – if you look at just the fossil fuel companies, they’ve gone backwards by between 30% to 50%.”