Does AustralianSuper properly assess climate risk?

AustralianSuper member Dylan Quinnell, with Equity Generation Lawyers, has questioned the way the superannuation fund assesses the climate risk of the $1.4 billion it has invested in Vanguard index funds and has requested more due diligence information.

Further to that, Quinnell said that Vanguard had been criticised internationally for failing to manage climate risk and its investments, according to him, “did not appear consistent with AustralianSuper’s net zero commitments”.

“I’m requesting information from AustralianSuper to understand if my fund should be investing in Vanguard’s index funds that do not appear to address climate risk. I’m concerned that AustralianSuper might not be adequately protecting members like myself against the financial risks of climate change,” he said.

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“I’m really concerned about climate change and what it means for future generations like my three-year-old son, as climate related extreme weather events like floods and bushfires continue to worsen. Having previously worked in the international humanitarian sector, I know firsthand the immense destruction and hardship that more intense climate-related natural disasters like tropical cyclones and droughts can cause.”

According to Quinnell, a recent report estimated Vanguard, which was the world’s second-largest asset manager with over US$7.2 trillion ($10.2 trillion) in assets, could lose US$3 trillion of investors’ money by 2050 if it did not start taking climate risk seriously.

Despite other investment firms adopting a more sensible climate policy, Vanguard’s stewardship priorities remained unchanged and neither climate nor environment was represented as a primary pillar in their standards of good governance, Quinnell said.

Quinnell would be represented by Equity Generation Lawyers, a law firm that brought Federal Court proceedings on behalf of fund member Mark McVeigh against REST Super alleging it was not protecting investors from climate risk.

David Barnden, principal at Equity Generation Lawyers said: “AustralianSuper recognises climate change as a material issue in its investment portfolio, yet it continues to invest in Vanguard index funds which don’t treat climate change as a financial risk.

"According to analysts, Vanguard is the largest investor in fossil fuels in the world, holding over US$290 billion in fossil fuel investments and 6% of global fossil fuel assets.”

Super Review contacted AustralianSuper and a spokesperson said the fund had no comment on the matter.



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