How switching super impacts climate change

Yasmine Raso

Senior Journalist, Financial Newswire

2 February 2023

A new whitepaper from Australian Ethical, supplanted by research from the UTS Business School and Lonergan Research, has found moving super or investments to an ethical-focused fund can help reduce one’s carbon footprint and positively impact climate change.

The combined research found switching $50,000 in superannuation or investments to a ‘responsible’ fund with a low carbon footprint was ranked third, behind installing solar panels and changing to a renewable energy plan, in terms of actions that can best reduce an individual’s carbon footprint.

This comes as financial advisers who responded to the survey conducted by Lonergan Research said the demand for responsible investing options from clients had grown, with 52 per cent of clients in 2022 requiring environmental issues to be considered for inclusion in their portfolios.

Despite these figures, the whitepaper also revealed the barriers investors have faced when it comes to switching their super to an ethical fund. Just under one in five super holders said they have not changed funds due to greenwashing concerns, while 25 per cent said they do not understand the impact super funds and investments have on climate change.

“Australians care deeply about fighting climate change, so much so that 96 percent of them are already taking action to reduce their carbon footprint,” Chief Customer Officer at Australian Ethical, Maria Loyez, said.

“More and more Australians want their capital invested in line with their personal values, and many of them are looking to their advisers on how to do this.

“Many people are not sure about the amount of CO2e emissions generated through various everyday actions and are unaware that investing their superannuation in an ethical fund can have a significant impact by directing money away from companies that are contributing to climate change.

“When enough people invest responsibly, this collective action can act as a powerful signalling mechanism for change in the industry whether that’s through public pressure or shrinking access to capital and insurance.”