Switching to a green super could halve your carbon footprint, say experts
With the Intergovernmental Panel on Climate Change (IPCC) issuing a ‘code red’ for humanity in its most recent report, many will be feeling at a loss. The report shows that since 2011 CO2 emissions have continued to rise, reaching a yearly average of 410 parts per million.
Things seem bleak, but as Sarah Connor famously said in The Terminator: "the future is not set."
The report backs up this prophetic message, illustrating that there are multiple potential climate futures. The best future is one in which carbon emissions are drastically reduced in the next ten years. Now we know that a lot of the work has to be done by governments, but there are some things we can do as individuals. One of these is to switch to an environmentally focused superannuation fund.
The impact of switching to a green super
Superannuation fund Australian Ethical and Independent MP Zali Steggall are together urging Australians to switch their super funds for the good of the planet. This plea comes after the super fund crunched some numbers and figured out that household emissions could be significantly reduced all over Australia, if everyone moved their retirement fund to a climate friendly super.
The reason superannuation funds are so important is because, for many of us, they make up the largest lump sum of savings we will have at any given point. The average Australian super balance ranges from $24,000 for a 25-year-old to $523,000 for a 65-year-old.* Collectively, there is around $3 trillion in super funds in Australia. If all of that money were directed towards cleaner investments, Australian Ethical says the carbon footprint from all households across the country could be cut in half.
The super fund worked out that everyone putting their money into a climate friendly retirement fund could lower carbon emissions by around 78 million tonnes per year. That’s the equivalent of cutting the average emissions of around 4.6 million Australian households - or taking 16.9 million petrol cars off the road.
Steggall, who introduced the Climate Change Bill in 2020 said, "Transferring funds to an ethical funds manager is a clear way for individuals to reduce their own emissions." Australian Ethical chief executive, John McMurdo added to this, saying that alarmingly many Australians do not know what their super funds are invested in.
"This means that your money could be supporting companies that completely undermine your values, like those related to climate change," he said.
The question is - where do you begin to search for a more environmentally focused superannuation fund?
Where to find a greener super fund
The good news is that resources evaluating super funds on their ethics already exist. Some organisations and associations to check out include:
- The Ethical Advisers Co-op: This not-for-profit co-operative was established over 10 years ago and consists of 35 financial advisers with a passion for ethics and finance. The co-op’s most recent superannuation funds ethical ratings could be a good place to start your research.
- The Responsible Investment Association of Australasia (RIAA): A champion for responsible investing in Australia and New Zealand, the RIAA has a nifty search tool to help you narrow down superannuation options.
- Market Forces: Environmental campaigner Market Forces has been lobbying banks and other financial providers to move away from fossil fuels since 2013. As part of this the campaigner has put together a comprehensive list of super funds and whether or not they invest in coal.
- 1 Million Women: Environmental charity 1 Million Women also has a marketplace, where you can search for more ethical products and services. As part of this the charity recommends two fossil fuel-free, women-led super funds.
It’s also a good idea to keep an eye on the news and see how some super funds might be improving. For instance, UniSuper recently reported that it has made significant progress on its commitment to achieve net zero emissions by 2050, in line with the Paris Climate Agreement.
The super fund revealed that 40 of its top 50 Australian investments now have operational targets in place, compared to 34 last year. In its newly released Climate Risk report, UniSuper says that 26% of its portfolio is already committed to being carbon neutral or reaching net zero emissions by 2022.
Demanding more of your super
This news story brings us to our last point, which is that if you do switch super funds - don’t leave quietly! Just like you, superannuation funds have the ability to change and do better. You could even start your research by finding out what exactly your current fund invests in.
If you’re not too happy with what you find, you could lobby your current super fund to make more climate friendly investments. Then if you wind up switching be sure to tell them why you’re leaving. It may even encourage them to do better.
Want to read more stories like this? Head to Mozo’s life and money news hub where we cover everything from monthly financial checklists to Australians turning to social media for financial advice.
*Average superannuation fund balance taken from ABS data, presented in a QSuper report.