Australian Financial ReviewMay 20, 2025 – 5.00amAustralianSuper...

Australian Financial Review
May 20, 2025 – 5.00am

AustralianSuper has reinvested in the country’s largest coal producer, Whitehaven Coal, a move the superannuation giant insists is consistent with its commitment to net zero emissions by 2050 but which environmental activists have labelled an insult to the fund’s 3.5 million members.

Last week – just days before three climate-related investment groups of which AustralianSuper is a member declared they’d double down on pressuring listed companies to decarbonise – AustralianSuper bought 1.3 million shares in Whitehaven, according the miner’s disclosures.

The trades came just before the Investor Group on Climate Change, the Australian Council of Superannuation Investors and the Responsible Investment Association Australasia said they would not be deterred by the Trump administration from demanding companies have credible plans to cut emissions. The White House is publicly opposed to those initiatives.

Major local energy and mining groups privately complain about the mixed messages from super fund investing teams and environmental, social and governance teams about the importance of emissions reduction efforts. But AustralianSuper said both its equities and ESG teams had a consistent view that the investment in Whitehaven would “create value for members”.

“Due to recent acquisitions, [Whitehaven] now has a majority business exposure to metallurgical coal, which is currently a key component of global steel production,” a spokesman said. “Its geographically diverse customer base is also important given the current global trade dynamic.”

He added AustralianSuper had considered ESG “as part of our investment process” and was “committed to our long-term goal of net zero by 2050”.

Whitehaven’s NSW operations produce thermal coal – which is used in power stations – but, after it bought the Daunia and Blackwater mines in Queensland from BHP last year, almost two-thirds of its revenue is now made from metallurgical coal, which is used in steel production, according to its interim result presentation in February.

Still, shareholder activist group Market Forces said thermal coal output was forecast to grow by around 60 per cent, primarily from new projects including Vickery in NSW and Winchester South in Queensland.

“AustralianSuper’s decision to buy back into Australia’s biggest coal expander is an insult to its millions of members who expect their fund to be following through on its climate commitments and fiduciary obligations,” said Brett Morgan, senior superannuation funds analyst at Market Forces.

As AustralianSuper makes its new bet on coal, the groups representing institutional investors on climate activity say the re-election of Prime Minster Anthony Albanese – and the push for Australia to host next year’s United Nations COP31 meeting in Adelaide – should embolden investors to stay the course on forcing companies to meet net zero commitments.

Last week, Nathan Robertson, executive manager at the Australian Council of Superannuation Investors, told a seminar hosted by the Australian Sustainable Finance Institute that driving ESG outcomes would continue to be a crucial goal for his members, who manage $1.9 trillion in assets.

“This is something our members have always been focused on – the financial materiality of sustainability and governance issues – and that is not something the [US political] noise we’ve seen recently would change because those risks will continue to exist in their portfolios,” he said.

Rebecca Mikula-Wright, chief executive of the Investor Group on Climate Change, told the same seminar Australia had been the fastest moving developed market globally on climate policy progress in the last three years. “That makes Australia a more attractive investment destination – helped by the reinforcement of the new government’s commitment to climate – when the US is looking increasingly risky for some,” she said.

However, on Friday, the day after those comments, Whitehaven said AustralianSuper owned 5.07 per cent of the company, after buying 580,000 shares last Monday and a further 733,000 shares on Tuesday.

AustralianSuper had previously been a shareholder of Whitehaven, but sold down in 2020 to align its portfolio with its emissions reduction target. The retirement savings fund has exited an investment in Coronado Global Resources, which mines metallurgical coal, as it shifted into Whitehaven.

The decision comes after Woodside Energy chief executive Meg O’Neill, at The Australian Financial Review Business Summit in March, then Goodman Group chairman Stephen Johns and former WiseTech Global director Richard Dammery, at an Australian Shareholders Association event this month, expressed frustrations investment and ESG teams within super funds were sending mixed messages to boards of directors.

Market Forces’ Morgan said the AustralianSuper investment could only be justified if the fund demands Whitehaven ends plans to expand thermal coal mines, and manages down existing coal production.

“The only way AustralianSuper can justify this giant backflip is by using its position to end Whitehaven’s polluting and risky coal growth plans and instead return shareholder capital through a wind down strategy,” he said.