Antinuclear

AustralianSuper ESG option invested in nuclear weapons: report.

Hannah Wootton, 1 Oct 24  https://www.afr.com/wealth/superannuation/australiansuper-esg-option-invested-in-nuclear-weapons-report-20240926-p5kdpp .
Australia’s 14 biggest superannuation funds are investing about $3.4 billion of workers’ retirement savings in nuclear weapons despite many promising to avoid controversial arms, new research shows.

Industry fund gorilla AustralianSuper alone had $1.5 billion in nuclear weapons companies, while UniSuper, Aware Super and HESTA invested more than $200 million each.

Hostplus was the only major fund on the Australian market to exclude nuclear weapons, according to the study by Quit Nukes and the Australia Institute.

It comes as members ramp up engagement with super funds over concerns about unethical or environmental investments and regulators crack down on companies making false promises to consumers about their social good.

It also follows Treasurer Jim Chalmers saying there was an opportunity for super funds to “think more strategically” about how institutional capital flows into the defence industry as part of his push last year to tap $3.9 trillion for nation building investments, which funds and experts pushed back on.

Looking at funds’ default MySuper options, which account for the bulk of their members and funds under management, the report found Aware Super was the most exposed to nuclear weapons.

About 0.91 per cent of its total funds in the option were in nuclear weapons, outstripping AustralianSuper with 0.7 per cent and UniSuper and HESTA with just under 0.5 per cent.

Nuclear weapons ‘excluded’

Quit Nukes director and report co-author Rosemary Kelly said if funds wanted to keep pace with international law, global investment norms and members’ expectations and make the best risk-adjusted financial decisions, they would exclude atomic weapons.

“Super funds are being sneaky by boasting of policies to exclude ‘controversial weapons’ but not counting nuclear weapons as ‘controversial’,” she said.

“That’s pretty hard to swallow when you consider that the United Nations now considers nuclear weapons as controversial weapons.”

The report was based on portfolio holdings at December 31, 2023, and termed nuclear weapons companies as those which have a meaningful stake in the manufacture, maintenance, detonation or development of nuclear warheads and missiles or components exclusively used in them.

AustralianSuper and Spirit Super’s ESG options invested in them to the tune of $20.1 million and $400,000 respectively, despite targeting ethical investors and promising to exclude controversial (but not nuclear) weapons.

“That was a big surprise and it’s unacceptable. People read the headlines of funds’ websites and don’t have the tools to drill down into what’s actually happening – so if a fund says it excludes controversial weapons, a normal punter would think that includes nuclear,” Dr Kelly said.

Only Hostplus excluded nuclear weapons from its MySuper offering, while nine more funds ruled out controversial weapons but not atomic ones. AustralianSuper, Brighter Super, UniSuper and Care Super did not exclude any arms.

Financial sting

Dr Kelly, who is a former Aware Super director and headed its investment committee, said super funds needed to take the long-term economic implications of nuclear war seriously given their legal obligation to always act in the best financial interests of members.

“Any nuclear war, started intentionally or by accident, will be disastrous for global financial markets. This is clearly not in anyone’s best financial interest,” she said.

Even a “limited nuclear war”, which some conflict strategists view as a tactical alternative to full nuclear war should deterrence ever be deemed necessary, involving just 250 of the 12,000-plus atomic weapons in the world would kill 120 million people outright.

It would then risk a further 2 billion lives through a nuclear famine and have significant consequences for global supply chains and manufacturing.

Modelling included in the report showed there was no meaningful change in super fund returns when nuclear weapon companies were excluded from portfolios compared to when they were included.

An Aware Super spokeswoman said the fund’s investments in nuclear were only in companies where the weapons component was “a very small part of their overall business”, and its controversial weapons policy more broadly was under review.

A HESTA spokesman said only a small portion, 0.15 per cent, of the fund’s total assets were in nuclear weapons and that Quit Nukes’ data was outdated.

But the report acknowledged the fund had reduced its holdings since the data collection and sold out of four of the five companies it had previously held in breach of its own commitment to exclude companies earning more than 5 per cent of revenue from nuclear weapons.

An AustralianSuper spokesman said the fund’s members had “diverse values, preferences and attitudes when it comes to investing”, with any exclusions and screens communicated to them on its website.

Spirit Super planned to review its ESG and nuclear weapons positions after its current merger with Care Super completed.

October 1, 2024 - Posted by Christina Macpherson | AUSTRALIA - NATIONAL, business