Taking a passive stance on climate change isn't something Australia's A$2.9 trillion ($2 trillion) superannuation industry can get away with for much longer.
After deadly wildfires razed an area the size of England, custodians of the nation's retirement savings are being asked to take more direct steps to combat global warming. Environmental activists and funds' own members say the common practice of staying invested in the biggest polluters to exert influence isn't sufficient, putting firms under mounting pressure to either divest or significantly cut exposure to offending companies.
Outside of Australia, change is happening faster. BlackRock Inc. last month said it would exit debt and equity investments in thermal coal producers from its active portfolios. Europe's largest pension fund Stichting Pensioenfonds ABP last week pledged that its investments would be climate neutral by 2050, while U.K.'s Brunel Pension Partnership in January threatened to fire managers that fail to curb exposure to climate change and position for a low-carbon economy.
"We've seen a spike in Australians connecting the bushfires to climate change, and then to how they're investing their money," said Simon O'Connor, CEO of the Responsible Investment Association Australasia. "The onus is on funds to set really strong, quantifiable targets and then demonstrate they're moving in the direction of meeting those targets."
The world's fourth-largest pool of retirement assets has to date resisted meaningful change. While funds pepper their corporate reports with sections on environmental, social and governance practices and appoint ESG heads, they've steadfastly held onto positions in climate-change offenders, like Glencore and Whitehaven Coal.