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The Guardian
a day ago
- Business
- The Guardian
A guide to greener banking: I divested my personal finances and you can too – here's how
What if your money was quietly fuelling the climate crisis – and you had no idea? If you bank with one of the big four or have retirement savings in superannuation, there's a good chance it is. In Australia, many major banks and most default super funds continue to invest in fossil fuel companies and their coal, oil and gas projects, driving global warming. That's where the global divestment movement comes in. Divestment means shifting your money out of harmful industries and into more ethical, climate-positive alternatives. It's the opposite of investment – you simply pull your capital out of companies or funds that contribute to environmental or social harm. Over the past few years, I've delved into divesting my personal finances and learned some key ways this shift can make a real difference. If you only tackle one area of divestment, make it your super – it's often your largest pool of money beyond property, and too often it's channelled into fossil fuels. The climate lobby group Market Forces estimates $150bn of Australians' retirement savings – roughly $6,200 per member account on average – could be tied up in 190 global companies driving the most climate damage. And such investment is growing, meaning our retirement savings are increasingly being used to create a more polluted world to retire into. One way to find a better option is to use the Market Forces comparison tool. It profiles more than 70 fund options, pinpointing just seven that fully exclude fossil fuels and the so-called 'Climate Wreckers Index' of the world's worst polluters. Using this type of information, I divested from a large Australian super fund which has known investments in fossil fuels and moved to a fund that excludes major polluters such as Woodside, Whitehaven Coal, Santos, Origin and AGL. Justin Medcalf, co-founder of Ethical Advisers' Co-op and Unless Financial, says to beware the 'devil in the detail'. For example, some funds use a tiered threshold screening, which may allow investment in companies earning limited amounts of their revenue from coal mining. 'A lot of investors assume that having a screening process in place means zero exposure to fossil fuels. It can be a rude surprise to discover there is still exposure,' Medcalf says. 'Ultimately, there is no perfect portfolio. For now, it's 'how do we create the best version of something that isn't perfect?'' All four of Australia's big banks – ANZ, Commonwealth Bank, NAB and Westpac – pour billions into fossil fuel projects each year, as do many other major players. In 2021, when searching for my first mortgage, I saw the chance to divest from a big four bank and switch to a more ethical option. I told my broker I wanted a home loan that was both competitive and backed by a bank that doesn't fund fossil fuels. We landed on one of the few with a cleaner track record. To find out where your bank stands, use Market Forces' Compare Banks tool. It includes a 'tell them to stop' button, so you can quickly send a message and easily demand change. That's crucial, says Medcalf. 'A lot of people move their money but don't say anything, so the bank never knows why. A key part of the divestment movement is communicating,' he says. And it works. Just last year, Commonwealth Bank broke ranks and announced it would stop financing fossil fuel companies that don't comply with Paris climate goals. 'That was quite a considerable win and a lot of that is attributed to the divestment movement,' Medcalf says. If you're investing in shares, ETFs or managed funds, beware of greenwashing. Many mainstream investment products – even those labelled 'sustainable' or 'balanced' – still include major polluters. Tools like the Responsible Investment Association of Australasia's certification and the Ethical Advisers' Co-op's Leaf rating can help you find investment products and services that meet high standards of environmental, social and ethical performance. 'We need a mindset shift,' Medcalf says. 'Rather than thinking 'what can I avoid?', think 'what can I actively invest in?' Yes, we want to avoid industries that aren't creating a positive future, but we can also get behind the industries of the future.' And divesting doesn't have to mean missing out financially – it may even boost your returns. RIAA's 2024 Benchmarking Report shows responsible investment funds have outperformed mainstream ones by 3% over 10 years, and 1.5% over five years. For long-term investors, especially those in their 30s and 40s, Medcalf says it makes sense to start factoring in environmental risk. Fossil fuel assets are increasingly seen as vulnerable, with tightening regulations and the growing risk of becoming 'stranded' and unprofitable. If you want to go a step further, consider strategically buying into a polluting company along with fellow shareholder activists who then band together to demand change from the inside. You can get started with as little as $500 using the Sustainable Investment Exchange (SIX) platform. Whether you divest, reinvest or become an activist shareholder, the point is the same: your money is powerful and you can actively choose whether it props up harmful industries or helps build a better future.
The Guardian
21-05-2025
- Business
- The Guardian
It's time to ask: do you know what your super is really supporting?
Almost every Australian has money in superannuation. With a total of $4.2tn held in super at the end of 2024, ours is one of the world's largest pension markets. That's some serious buying power, and therefore influence, that super funds have. But is that money doing harm or doing good? Will van de Pol pays close attention to the actions of super funds. As the CEO of Market Forces, he helps hold Australian financial institutions to account for their roles in practices that harm the environment and exacerbate climate change. 'Unfortunately, most super funds don't make it easy for the average punter to wade through the thousands of lines of data to get to the truth,' van de Pol says. To counter this lack of transparency, Market Forces analyses how much Australia's big super funds are investing in the world's biggest climate wreckers. At the end of 2023, more than $39bn held in the default or largest investment options with 30 of Australia's largest super funds was invested in companies that were driving climate damage with their coal, oil and gas expansion plans, Market Forces research found. However, van de Pol says, it doesn't have to be this way. The eight largest super funds manage the majority of our retirement savings, and in March 2024 they collectively owned almost 25% of Australian listed shares. This is our money being invested. And by extension, we have a role in what happens to it. Alison George is the chief impact and ethics officer at Australian Ethical, a Certified B Corp super fund that believes in steering capital towards companies that are doing good and away from those that aren't. Its ethical charter governs where and how it invests, with guiding principles that align with UN sustainable development goals. 'For most people, it might be difficult to touch those issues,' George says, 'but their superannuation money is one of the things that lets them have some power.' With so many shares under their control, van de Pol says, Australia's big super funds have significant power to influence how companies act. 'That's where our power comes in,' he says. 'Our power as a collective community that is ensuring that our retirement savings are being used in a way that shepherds our economy to a stable warming outcome and provides a world worth retiring into.' George says: 'Large investors, like super funds, do have quite a lot of power. As an individual or a shareholder, you don't have the ability to open all the doors that a big investor can. When [large] investors then also collaborate and align around things that matter and work with civil society and not-for-profits, they can take that even further.' In listed companies, every shareholder typically has the right to one vote per share, so if a super fund holds lots of shares, it may be able to sway a company's decisions. However, shareholders – including super funds – can abstain from voting, allowing choices to be made without challenging them. Van de Pol says: 'The vast majority of funds are failing to use that power to push polluters far enough and fast enough on climate action. We can see that by the fact that companies are continuing to drive up real-world emissions by pursuing new oil and gas projects.' Withholding votes against actions such as these, he says, effectively constitutes an endorsement. When members challenge their super funds over fossil fuel investments, the most common response is that the funds are hoping to change big-polluter behaviour from the inside. 'That's awesome and great if they're delivering on that promise, but it is not how we are seeing things play out at the moment.' Since 2022, Australian funds have been legally required to disclose their investment holdings, including the name, market value and proportion of assets in each portfolio. This information is usually listed on funds' websites, though there's no requirement that they make it easy to find. If you want easy-to-access information, Market Forces research is a good start. Many of us try to do the right thing about our consumption choices George says: 'It's important to recognise that it's your money and it's a big choice. Many of us try to do the right thing about our consumption choices. You may as well put it into something that's a big choice that maybe makes a difference.' George says a lack of clear information from some funds can itself reveal something about their actions. If your fund is making ethical investment decisions, they'll be upfront about it, she says. 'They will want to talk about it, because it's something that they're committing business resources to doing.' When we start working, our employer has to make super contributions on our behalf, and may use a default fund if we don't nominate one. That means many Australians are put into a fund, and may never have taken a close look at it. The good news is almost all of us have the right to choose a different fund – and it's easy to switch. Using an analysis tool such as Market Forces or Responsible Returns can help members find out what their super funds are doing and find funds that better suit their ethical positions. The process of switching is relatively simple. At any time, you can choose to join a new fund and notify your employer so they can pay contributions to your new account. If you have accounts with multiple super funds, you also have the option to consolidate them into a single account. You may want to seek independent financial advice to help with your decision-making. Van de Pol says the degree and ease of choice should give Australians hope that their super can do good. 'That hope comes from the power that we have as individuals,' he says. 'Collectively, making decisions to align our finances with our values has the power to shift the entire superannuation industry into gear.' Super funds have an obligation to act in the best financial interests of their members, van de Pol says. 'So, it is really up to all of us to make our voices heard and ensure that that giant multi-trillion-dollar pot of money is held to account and is directed in a way that delivers us a stable and clean world to retire into.' Learn more about how Australian Ethical can invest your money to help build the future you want for yourself, your family and the world. This information is general in nature and is not intended to provide you with financial advice or take into account your personal objectives, financial situation or needs. Before acting on the information, consider its appropriateness to your circumstances and read the PDS and TMD at Issued by Australian Ethical Investment Ltd (ABN 47 003 188 930, AFSL 229949)
The Guardian
29-04-2025
- Business
- The Guardian
Woodside commits $18bn to US project that climate advocates warn ‘would export harmful gas until the 2070s'
Australian energy company Woodside will spend $18bn on a new liquified natural gas (LNG) project in the US that one advocacy group said would add 1.6bn tonnes of greenhouse gas emissions over its 40-year life. Climate advocates said the announcement, made the week before Woodside's annual general meeting, would put further pressure on the company after a major rebuke from shareholders last year over its emissions plan. Woodside's chief executive, Meg O'Neill, said the decision to invest in the Louisiana project was a historic moment and would turn the company into a 'global LNG powerhouse'. Sign up for the Afternoon Update: Election 2025 email newsletter The project was expected to cost US$17.5bn (A$27bn), with investment company Stonepeak also investing US$5.7bn (A$8.8bn). Will van de Pol, chief executive of corporate climate advocacy group Market Forces, said Woodside had committed to a project 'that would export harmful gas until the 2070s'. Market Forces estimated the project would add 1.6bn tonnes of CO2-equivalent over its life – the equivalent of running Australia's biggest coal-fired power station, Eraring, for 120 years. For context, Australia's total annual emissions currently are 435m tonnes. Van de Pol said Woodside investors AustralianSuper and industry super fund Hesta, 'can't wash their hands of these massive new emissions committed on their watch, and they must escalate pressure by voting against directors at Woodside's AGM next week'. Alex Hillman, lead analyst at the Australasian Centre for Corporate Responsibility (ACCR) and a former climate adviser to Woodside, said: 'Investors have voiced increasing displeasure with Woodside's climate strategy, most recently with the world's only majority vote against a company's climate plan at Woodside's 2024 AGM.' ACCR sent a formal statement to Woodside to ask shareholders to vote against the re-election and election of directors at next week's AGM. Hillman said Woodside was 'doubling down on its climate strategy by proceeding with its largest-ever LNG project' and the statement would put increasing pressure on the company to listen to concerns. The bulk of climate-related emissions from Woodside's business come from 'scope 3' emissions, which mostly occur when the company's gas is sold and burned by its customers. Sign up to Afternoon Update: Election 2025 Our Australian afternoon update breaks down the key election campaign stories of the day, telling you what's happening and why it matters after newsletter promotion These indirect emissions totalled 74.65m tonnes of CO2-equivalent (co2-e) last year, according to company disclosures. The company's only plan to address these was to invest US$5bn in 'new energy products and lower-carbon services' by 2030, that would indirectly cut 5m tonnes of CO2-e each year. ACCR said Woodside's decision to go ahead with the Louisiana project would increase its annual scope 3 emissions by 27%. A Woodside spokesperson declined to comment on the increase in scope 3 emissions identified by the advocacy groups, but said the company's climate targets – including a 30% cut to direct emissions by 2030 – remained unchanged. Woodside said its US$2.35bn investment in an ammonia project was a 'material step' to its scope 3 investment goal which, when complete, would save 3.2 megatonnes of CO2-e each year. AustralianSuper said it had no comment. The Guardian also approachedHesta for comment.
Perth Now
22-04-2025
- Business
- Perth Now
Australia urged to walk away from gas for renewables
Most Australians would prefer more renewable energy, but the two major parties have made years-long commitments to gas expansion. About three in five people believe adding renewables - such as wind and solar with battery storage - is a better solution to meet Australia's energy needs than increased gas than half believe fracking brings more problems than benefits to local communities, according to a YouGov survey commissioned by environmental financing advocacy group Market Forces. With Australians set to take to the ballot boxes for the May 3 election, gas could shift votes. Labor has committed to opening new gas fields as part of Australia's transition to net-zero emissions, while the coalition has promised to increase gas supply to try to lower energy prices. Market Forces does not take positions on political parties as it focuses on the private sector, but analyst Kyle Robertson said expanding new gas fields was incompatible with the goals of the Paris Agreement, an international treaty on climate change which Australia has backed. "We're still a massive exporter of fossil fuels and both major political parties support that," he told AAP. "We need to walk away from our expansion plans, not just domestically, but also for projects that will be exported overseas." Australia was the world's seventh-largest gas producer in 2020, but about 70 per cent was exported in 2019/20, according to government figures. As a result, a majority of people think expanding gas does not benefit them or the nation, the YouGov survey found. Fracking in particular is a sore spot for many Australians, with two in three believing it is harmful for the environment and just under half opposing the practice, which is banned in Tasmania, Victoria and 15 countries due to environmental and health risks. Even those who support the expansion of gas fracking harboured concerns, the survey revealed. Almost half of them believe expanding renewable energy is a better option, while 42 per cent believe it is harmful for the environment. This could be because Australia's industry says there are looming gas shortages that can only be addressed by opening new gas fields. "In an ideal world, Australians want more renewable energy, but they've been sold a narrative by the gas industry that gas is absolutely essential for the energy transition," Mr Robertson said. "So, there's certainly work to do there around public perceptions." In March, the Australian Energy Market Operator - which has long predicted gas shortfalls for the southern states - downgraded its forecast as high prices, mild winters and electrification pushed back gas shortages until 2028. This could indicate electrification through renewables, alongside battery storage, was the "way of the future", Mr Robertson said.
