Active ownership best way to tackle climate change

The superannuation industry needs to engage more with their members about why active ownership is the best way to tackle climate change rather than divestment, according to Spirit Super.

Speaking at the Actuaries Institute’s summit, Spirit Super (the merged MTAA and Tasplan entity) chair, Naomi Edwards, said it was beholden on the industry to communicate much better n why active ownership could be financial rewarding and the best way to tackle climate change.

“We’d like to engage with members about the reality for the size of super industry which is massive and the fact that it’s not possible for the economy for every super fund to divest from every single part of carbon in its chain,” she said.

“If we did that that would put an automatic exclusion on over 80% of the Australian Securities Exchange [ASX]. You can’t have 80% of the ASX lost all of its capital overnight. That is catastrophic for the functioning of the economy we need all corporations to be working very hard and cooperatively towards this goal of net zero by 2050.

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“Whilst divestment feels fantastic for the person doing it they completely lose a voice at the table around the biggest part of the economy and so our ability to engage collectively through groups like ACSI [Australian Council of Superannuation Investors] gives us the ability to contribute to change in a meaningful way with large corporations who are vital to Australia.”

Edwards said this was the message the fund was trying to explain to younger members and while many understood it took “time and openness to listen”.

“Of course there are very successful start-up super funds who are fossil free and have a simple straightforward message and who have done very well. It’s beholden on us to communicate much better why active ownership can be financial rewarding and the best way to tackle climate change,” she said.

Also on the panel, Mercer senior responsible investment specialist, Jillian Reid, said divestment had appeal because it was simple to communicate with stakeholders and set rules for fund managers.

“There might be a role in that but it doesn’t remove emissions from the atmosphere and does not transition our economy,” she said.