Super fund moves away from fossil fuel interests

Rod Brown
Deputy Secretary (Research and Industrial)

First State Super has divested from fossil fuels in its two socially responsible investment options.

In a letter to members, First State Super said it would “exclude companies that source more than 20 per cent of their operating revenues from the production, sale and distribution of fossil fuels, including thermal and coking coal, oil, natural gas, transmission or transportation for the purpose of exporting and/or non-household use (e.g. power generation)”. The fund also said it would exclude companies that explore and or develop fossil fuel reserves or have a substantial involvement in coal seam gas fracking.

FSS chief investment officer Richard Brandweiner said: “We are increasingly of the view that the [socially responsible investment] options should reflect the expectations of the members. The decision was based on our belief of what members who choose a socially responsible fund would be looking for.”

He added that the fossil fuel divestment in the socially responsible options was designed “to reflect the views of some of our members”. Options can be found at firststatesuper.com.au/Investments/InvestmentOptions.

While the broad fund is not looking to divest from fossil fuels, Mr Brandweiner said the fund would introduce energy ratings to the companies it invests in.

“Our research will focus on the companies’ resilience to climate change, the existence of stranded assets and the ways companies are dealing with climate change,” he said.

First State Super is also looking to “proactively invest in renewable energy” and assessing how to deal with climate-change risk across its $52 billion portfolio, Mr Brandweiner said.

“We’ve been working for the past 12 to 18 months on trying to build a better understanding of the implications of climate change and fossil fuels across our portfolios and the implications of climate change on company earnings into the future,” he said.

First State Super (FSS) is the is the default superannuation fund for NSW public sector employees and the fund to which the majority of teachers, nurses, police and other NSW public sector employees belong. It is one of Australia’s largest superannuation funds with more than $52 billion in funds under management and more than 750,000 members. FSS members can elect to have their superannuation invested across a range of investment options including cash, fixed interest, property, Australian and international equities (shares) or a combination of these.