An Open letter to Telstra Super on fossil fuel investments, particularly Santos and Woodside Energy

The following email to one of my superannuation funds, Telstra Super, was partly generated from the latest Market Forces Climate Wreckers Report. It is easy to generate a letter with specific information to your Super Fund. I added substantially more contextual information to my email. But a short personal note with reasons on the necessity for divesting for our future can also have an impact. 

Every Super member has an opportunity to change how their superannuation is invested, divesting away from fossil fuels to clean energy solutions.

To TelstraSuper,

Time to End all investments in the world’s worst fossil fuel expanders

I’m contacting you to demand that you end the fossil fuel expansion plans of companies you invest my retirement savings in, and publicly divest from them if this fails.

I have particular concerns that your engagement with Woodside and Santos to adopt a change in business, has failed. These companies are almost entirely dedicated to Fossil fuel production and expansion. Your continued investment of member superannuation money  in these companies under the rubric that you can engage and get them to adopt net zero emissions by 2050 is fatally flawed and is not in keeping with your fiduciary duty to act for members long term behalf.

I have read the UN High Level Expert Group report on Greenwashing (Integrity Matters: Net Zero Commitments by Businesses, Financial Institutions, Cities and Regions).[1] It states clearly that non-state actors (like Telstra Super) can no longer Claim to be net zero while continuing to build or invest in new fossil fuel supply (such as particularly Woodside Energy and Santos).

I also understand Telstra Super have investments in other climate wrecking companies. Where these companies have a broad portfolio, such as like BHP, it makes sense for Testra Super to actively engage to get disinvestment in the fossil fuel segment of these companies, and encourage investment in areas of climate solution such as renewables, critical minerals and green hydrogen. 

Telstra Super should also keep a watchful oversight of companies that over rely on carbon offsets or carbon capture and storage for their net zero roadmap. 

Carbon Offsets come with major accounting and integrity issues as shown by numerous reports. [2] 

Carbon Capture and Storage seldom lives up to its storage promises, is expensive, and entails ongoing monitoring with risks of leakage. [3]

I would urge you to read the International Energy Agency November 2023 report: Oil and gas industry faces moment of truth – and opportunity to adapt – as clean energy transitions advance. Woodside Energy and Santos show no signs of redirecting investment as the IEA suggests they do, therefore investment in these companies should be withdrawn. [4]

Market Forces Climate Wreckers Index

Market Forces research has identified the 190 companies from around the world with the biggest fossil fuel expansion plans.[5] This is the Climate Wreckers Index – the small but hugely damaging group of companies posing a significantly outsized risk to a safe retirement for us all. The combined emissions from the new and expanded coal, oil and gas projects these companies are pursuing totals more than 129 gigatonnes, which would eat up about half of the remaining global carbon budget for keeping global warming to 1.5°C.

This research has looked at the default (or largest) investment options of the top 30 super funds and their share investments in Climate Wreckers Index companies. I’d like to highlight several findings from the report regarding TelstraSuper’s MySuper Balanced investment option:

1) Climate Wreckers Index companies made up 8.6% of the listed equities in this investment option as at 31 December 2023. Without a clear commitment to phase out exposure to these companies in line with its own climate claims, TelstraSuper is letting its members down.

2) In comparison, just 2.8% of the listed equities investments in this option are clean energy companies, as listed in the Bloomberg Goldman Sachs Global Clean Energy Index.

3) Together, Woodside and Santos are responsible for 58% of projected emissions from the fossil fuel expansion plans of companies in this investment option. The fund must therefore make these two companies its highest priority if it wants to clean up its portfolio.

Any fund committed to the goal of net zero by 2050 is greenwashing unless it is pulling out all the stops to end the fossil fuel growth plans of portfolio companies, and has a commitment to phase out exposure to these companies. The Chair of the United Nations High‑level Expert Group on the Net Zero Emissions Commitments of Non-State Entities has stated: “Non‑state actors cannot claim to be net zero while continuing to build or invest in new fossil fuel supply.”[6]

I demand that TelstraSuper uses its leverage as an investor in Climate Wreckers Index companies to deliver an end to their fossil fuel expansion plans, otherwise continued investment in any of these companies is wholly indefensible and the fund must publicly divest.

Please acknowledge and respond explaining how Telstra Super continued investment with Santos and Woodside Energy and other climate wreckers meets Telstra Super ESG principles of investment and its fiduciary duty care of members funds for the long term [7], given the climate risks articulated by the climate science, the reports by the United Nations Expert Group on Greenwashing, and recent Internationaol Energy Agency reports on decarbonisation pathways.

Notes: 

[1]John Englart, Climate Citizen (9 Nov 2022) Addressing Greenwashing and net-zero pledges at non-state levels: New report by UN Expert group at COP27 https://takvera.blogspot.com/2022/11/addressing-greenwashing-and-net-zero.html

[2] There are many reports raising integrity issues of Carbon Offsets. See this recent peer reviewed science article: Macintosh, A., Butler, D., Larraondo, P. et al. Australian human-induced native forest regeneration carbon offset projects have limited impact on changes in woody vegetation cover and carbon removals. Commun Earth Environ 5, 149 (March 2024). https://doi.org/10.1038/s43247-024-01313-x

See Also Professor Bill Hare (16 February 2023) The Dangers of Overreliance on Carbon Offsets https://australiainstitute.org.au/post/the-dangers-of-overreliance-on-carbon-offsets-dr-bill-hare/

Climate Analytics (2023). Why offsets are not a viable alternative to cutting emissions https://ca1-clm.edcdn.com/assets/why_offsets_are_not_a_viable_alternative_to_cutting_emissions.pdf?v=1697123932

[3] Institute for Energy Economics and Financial Analysis (IEEFA) Topic page on Carbon Capture and Storage https://ieefa.org/ccs 

[4] IEA, 23 November 2023, Oil and gas industry faces moment of truth – and opportunity to adapt – as clean energy transitions advance https://www.iea.org/news/oil-and-gas-industry-faces-moment-of-truth-and-opportunity-to-adapt-as-clean-energy-transitions-advance

See my blog: John Englart, Climate Citizen, (26 Nov 2023) Momemt of truth for Fossil Fuels: Warning from IEA that Fossil Fuel companies need to transition or die https://takvera.blogspot.com/2023/11/momemt-of-truth-for-fossil-fuels.html

[5] Market Forces, (May 2024), The Climate Wreckers Index https://www.marketforces.org.au/campaigns/super/climatewreckersindex/

[6] United Nations, (November 2022), Integrity Matters: Net Zero Commitments by Businesses, Financial Institutions, Cities and Regions https://www.un.org/sites/un2.un.org/files/high-level_expert_group_n7b.pdf

[7] Fiduciary duty of care for financial investment and climate risks is well established. See APRA, Prudential Practice Guide CPG 229 Climate Change Financial Risks (November 2021) https://www.apra.gov.au/sites/default/files/2021-11/Final%20Prudential%20Practice%20Guide%20CPG%20229%20Climate%20Change%20Financial%20Risks.pdf

See also AICD (2016) Climate Change & Directors’ Duties – Legal Opinion https://www.aicd.com.au/board-of-directors/duties/fiduciary/climate-change-and-directors-duties-legal-opinion.html

Sincerely,
John Englart

Key Findings of the Climate Wreckers report

• Super funds have more than doubled their investments in climate wrecking companies over two years, to a total of $39 billion.
  The default or largest investment options of 30 of Australia’s largest super funds had $39 billion invested in Climate Wreckers Index companies at the end of 2023. This is a significant increase from December 2021, where these options collectively invested $19 billion of members’ retirement savings in climate wrecking companies. The increase in super funds’ investments in these companies is roughly in line with the growth in these companies’ market value, meaning there has been no major trend of super funds actively selling down these dirty investments.
  
  
• Every single super fund has increased its investments in the Climate Wreckers Index over the past two years.
  Almost all of these super funds are committed to net zero emissions by 2050 or acknowledge that climate change poses significant risks, yet every single one of them has increased its investments in these companies over the past two years, both in dollar terms and as a proportion of their share investments. Corporate regulator ASIC (the Australian Securities and Investments Commission) has repeatedly warned it is on the lookout for companies without a ‘reasonable basis’ for having made net zero claims or targets. Funds genuinely committed to a net zero future must stop supporting fossil fuel companies taking the world in the opposite direction.
  
  
• Just three Australian companies – Woodside Energy, Santos and Whitehaven Coal – are responsible for the majority of projected emissions attributable to the fossil fuel expansion plans of climate wreckers in most super funds’ portfolios.
  While most super funds are invested in a significant amount of Climate Wreckers Index companies, Woodside, Santos and Whitehaven are responsible for 59% of projected emissions from the fossil fuel expansion plans of companies in the average super fund’s portfolio. Funds looking to clean up their members’ retirement savings must focus on these companies as their highest priorities.
  
  
• Investments in climate wreckers have skyrocketed while investments in clean energy companies have languished.
  Despite the fact that super funds’ investments in Climate Wreckers Index companies have increased by about $20 billion over two years, investments in clean energy companies* have decreased by half a billion dollars to just $7.7 billion over that same timeframe. This means that for every dollar invested in clean energy companies, super funds have five dollars invested in climate wreckers.
  
  

Three graphs tell the super investment story over the last two years:

References:

Market Forces, May 2024, Climate Wreckers Index report https://www.marketforces.org.au/campaigns/super/climatewreckersindex/
See PDF: https://www.marketforces.org.au/wp-content/uploads/2024/05/Climate-Wreckers-Index-report-2024.pdf