Ethical superannuation: matching your money to your values

DOCTORS who want to ensure their superannuation is being invested in accordance with their personal values and ethics are being urged to put the hard word on their super fund.

With a record number of Greens and a new wave of climate-focused independents being voted into federal parliament on 21 May, the environment has never been more top of mind.

One group of doctors is about to put their money where their mouths are. Disappointed with the response from superannuation fund HESTA about their investment in fossil fuels, the doctors are planning to divest in mid-June.

The campaign is supported by Market Forces, an organisation that exposes the institutions that are financing environmentally destructive projects.

According to Rachel Deans from Market Forces, many HESTA members don’t feel like their requests are being heard.

“Members feel like HESTA isn’t listening to their requests … to divest from companies expanding fossil fuels, companies like Santos and Woodside, for example. And as a result, there are more than 100 members planning to divest from HESTA,” she explained.

Kim Farrant, HESTA General Manager – Responsible Investments, told InSight+ that 3.89% of their total portfolio was exposed to the production or sale of fossil fuels or their use in energy generation. However, despite that, they try to use their influence to push for climate action and have committed to achieving “net zero”’ in its absolute carbon emissions in its investment portfolio by 2050.

“The effectiveness of this approach was most recently demonstrated when HESTA stepped up to make our views known about the planned demerger of AGL,” she explained.

“That’s why we use share voting and engagement to push companies to appropriately manage climate risk,” she said.

Ms Deans appreciated the move but hopes for more.

“It was good to see HESTA speaking out against the AGL demerger,” she said.

“But what members would really like to see is HESTA showing climate leadership by divesting from companies expanding fossil fuels, because ultimately that is the biggest impact the fund can have.”

However, one doctor who is planning on divesting in June, Dr Rosalie Schultz, doesn’t think that’s enough.

“It’s not enough to reduce investments in carbon bombs. Less bad is not good enough. We should be actively investing in clean industries that desperately need it,” she told InSight+.

According to William Ezzy, a client services manager at DPM, a financial services company for doctors, they have a conversation about ethical investing with every client and it’s now growing in popularity.

“It’s an increasing amount. Probably four out of five would say, yes I want to have a say in how that investment is undertaken,” he said.

Unless you have a self-managed super fund or a master trading account, where someone is doing the financial management, then you don’t have a lot of choice over the investments your super fund is making.

Mr Ezzy said that historically, the Australian share market is built on resource and energy companies.

“I think, as a consequence of that, the majority of super funds would have a position in fossil fuel producers,” he said.

However, Mr Ezzy said doctors need to think about their values and what means most to them. When thinking about ethical investing, he asks his clients to think about whether they want to do a negative screen or a positive screen.

“A negative screen is to say: ‘I want to specifically exclude something’. And then how hard do we run that negative screen? Is it just the fossil fuel producer, or is it also the lender to that company or the distribution arm to that company?

“An increasing number will say ‘I’m going to run a positive screen that says I’m going to invest in companies that are rated on their environmental, social and governance (ESG) factors’.

“To run a positive screen really means I’m going to invest more in companies that have a better environmental record or have a lower fossil fuel production, for example,” he explained.

If you’re interested in understanding more about your superannuation fund’s investment options, Mr Ezzy said the first step is to visit your superannuation fund’s website.

“Try to get as much information from the super fund’s website as possible. The fund should have some sort of responsible investment policy or philosophy that will give the member an idea how they invest money. Then further to that, a lot of super funds, HESTA being one, will have a specific environmental or sustainability investment option,” he explained.

According to Ms Farrant from HESTA: “We provide an investment option, Sustainable Growth that caters for members wishing to minimise their exposure to fossil fuels.”

Concerned superannuation members can also visit the Responsible Investment Association website to get a better understanding of what funds to invest in.

Ms Deans from Market Forces said that if you don’t like what you see, it’s important to let your super fund know.

“If a bunch of people decided they weren’t happy with the way their fund was investing their retirement savings, but didn’t tell their fund they were leaving because of that, it wouldn’t make as much of a difference compared with someone who was very vocal about why they were leaving their fund,” she said.

For Dr Schultz, the argument is simple.

“It shouldn’t be all about money, we should always think about how we can use all our resources to ensure the best outcomes, for everyone,” she said.

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