Coal is back in AustralianSuper’s portfolio. What happened to that net zero pledge? | Business

Almost six years ago, the country’s largest superannuation fund announced a major policy update: AustralianSuper’s investment portfolio would be subject to a net-zero carbon emissions target in line with the Paris agreement.

To address this point, the fund transferred its holdings to large thermal and metallurgical coal mining company Whitehaven Coal.

Fast forward to 2026, and the $388 billion fund manager with 3.7 million members is the largest investor in Whitehaven, which now operates six coal mines in New South Wales and Queensland and is developing more.

The investment is one that has confused many in the pensions industry, raising questions about whether the industry leader is aligning its investment portfolio with the climate targets it has committed to in 2020.

While most super providers are invested in fossil fuels, many are greatly limiting their exposure to thermal coal because it is an environmentally damaging energy source.

There are also concerns that having the country’s most dominant pension fund invest so heavily in Whitehaven – its stake is worth more than $600 million – will make it easier for other funds to make similar investments.

Geoff Warren, an associate professor at the Australian National University, said the Whitehaven investment was “not a good look” for Australia’s largest super fund.

“I looked at this investment and thought, why did they do this?” said Warren, who is director of research at the Conexus Institute, a retirement savings think tank.

“They must have thought it was attractive enough to invest in, and to me that is a sign that the fund is focusing primarily on its investment case and ignoring broader climate-related risks.”

A spokesman for AustralianSuper said the executive regularly reassessed investments in the energy and resources sectors and that “the energy transition will not be linear”.

“We invested in Whitehaven because it provided an investment opportunity given the market valuation combined with expanded and geographically diversified asset exposure to metallurgical coal, which is now a key component of steel production for the global economy,” the spokesman said.

Naomi Hogan, head of engagement and sector strategy at the Australasian Center for Corporate Responsibility, said super funds were needed to better assess the emissions plans of the companies they invest in.

“Some of Australia’s large super funds have been quite passive in their approach to company governance, and there is a risk that this will make it harder for other funds to act strongly and publicly on climate,” Hogan said.

He said some companies’ emissions targets were vague or relied on offsets or unproven technologies such as carbon capture to reach net zero by 2050.

AustralianSuper is also a major shareholder in oil and gas company Woodside Energy, another fossil fuel company with expansion plans.

According to the Intergovernmental Panel on Climate Change report prepared after the Paris agreement signed in 2015, greenhouse gas emissions from existing fossil fuel infrastructure are more than enough to move the world beyond climate targets, let alone develop new resources.

A Whitehaven spokesman declined to comment. The company’s sustainability report said Whitehaven supports the Paris agreement “recognizing the paradox that coal and fossil fuels play a critical role in the transition to a lower-carbon future.”

Super funds generally tailor their investments to the interests of their member base and the direction of those responsible for the fund; This helps explain the very different approaches within the industry.

AustralianSuper’s member base is so large that it is unquestionably representative of the general population.

Four in five Australians surveyed want their retirement to avoid social harms, including environmental harms, according to a report by Lonergan Research commissioned by fund manager Australian Ethical.

Australian Ethical’s chief impact and ethics officer Alison George said the question of whether super funds should invest in thermal coal and the expansion of fossil fuels was not complicated.

“Companies like Whitehaven Coal and Woodside are excluded from our portfolios because their core business is fossil fuels and extracting coal, oil or gas,” George said. he said.

‘A terrible record’

Brett Morgan, senior analyst and campaigner at climate activist group Market Forces, said AustralianSuper’s investment in Whitehaven could only be justified if the company used its position to demand an end to expansion plans.

“AustralianSuper has backed Whitehaven Coal’s 2025 executive pay plan, which encourages its CEO to pursue coal growth at the expense of a stable retirement for super fund members,” Morgan said.

“AustralianSuper has an abysmal voting record as an investor over the last five years that demonstrates a failure to hold some of Australia’s biggest polluters to account.”

AustralianSuper’s investments in coal, oil and gas are not among the fund’s controversial investments.

AustralianSuper sold its shares in Mineral Resources in 2024 amid a series of governance issues at the Perth-based mining services and commodities company and vowed to engage with the board.

MinRes CEO and founder Chris Ellison said he would step down “within 18 months” as part of an orderly transition.

Twenty months later he is still chairman of the company and has re-established his AustralianSuper stake, becoming the second largest shareholder after Ellison.

A MinRes spokesperson referred Guardian Australia to a recent company update stating that the leadership takeover process was progressing.

An AustralianSuper spokesman said the fund had never fully separated from MinRes and continued to communicate with the board and management.

“There have been meaningful improvements since the new chairman was appointed, including a refresh of the board, stronger oversight and better disclosure,” the spokesperson said.

AustralianSuper’s rapid change of direction runs counter to the stance of other major super funds such as Hesta.

A Hesta spokesman said there had been no change in its position that would cause it to sell its MinRes shares.

Hesta’s statement in May last year included Ellison’s comment that “the takeover timeframe did not reflect the seriousness of the problems and pointed to a systematic failure in management”.