Millions of workers urged to check their superannuation today

This article originally featured in Yahoo!Finance, and was written by Nick Whigham.

 'Australians will be shocked'

A new tool gives workers a quick understanding of the industries their retirement savings are funding as many Aussies cite a preference for ethical investments.

Aussie workers are being urged to check their superannuation fund and better understand what they’re retirement savings are being invested in. From today, a new tool allows Aussies to easily assess if they’re mandated salary contributions are unwittingly funding industries they might deem unethical.

Billions of dollars in the country’s more than $4 trillion superannuation sector is being funneled to companies linked to human rights violations, animal cruelty, environmental damage, weapons manufacturing, fossil fuels and social harm like gambling. That’s the finding from analysis done by Mindful Investing which examined more than 30 major super fund options and their underlying holdings. 

“There is a lot of trust … and people expect their money to be managed ethically and responsibly,” CEO Barry Coates told Yahoo Finance, with the organisation citing research showing 84 per cent of Aussies want to avoid some of the things they are actually invested in.

“A big influence on the Australian market is the Your Future, Your Super performance test, where super funds have to meet a benchmark standard, and that encourages a lot of super funds to sort of cling to the indexes, as they don't want to get too far away from the index they're going to be measured against,” he said.

“In the index there's lots of fossil fuel companies and weapons companies and gambling companies,” he added.

“And that may not be what a lot of consumers want.”

After operating in New Zealand and providing transparency tools for workers to see how their superannuation equivalent KiwiSaver is invested, Mindful Investing has today launched an online tool urging Aussies to do a “60 second test” to better understand their super fund’s exposure to different industries.

The analysis was typically able to asses about 70 to 90 per cent of the investments in each super fund portfolio.

“Australia's regulated disclosure is very poor, so we're having to work from the data that's available … but this is a sort of a way for people to find out the key things about their funds,” Coates said.

The analysis found the greatest level of exposure was to fossil fuels followed by human rights violations and then environmental harm. 

While so-called ESG investing – which priorities environmental, social and governance concerns – has arguably ebbed and flowed in its popularity during investment cycles in recent years, Coates said investors shouldn’t fear being ethical means getting lower returns.

“It's an old fallacy that ethical returns are lower, but you know most of the research says they're at least comparable, if not skewing on the high side,” he said.

Aussies ‘shocked’ by their super investments

Coates says workers should contact their superannuation funds and ask them about their asset allocation and potential alternative options if they have concerns about what they are inadvertently funding.

“Australians will be shocked to discover their retirement savings are contributing to harm in the world, from funding weapons being used in wars to supporting companies that violate human rights and destroy our environment,” he said.

One of those Aussies who has previously been shocked to find she was “unwittingly investing in the tobacco industry” was Dr Bronwyn King AO. 

Speaking to ABC radio on Wednesday morning, she recalled “the horrible” realisation she had in 2010 when she discovered her superannuation was being invested in tobacco companies as the default option.

Since then, the decorated oncologist who began her career working as a doctor on a lung cancer ward in Melbourne, has been on a mission to push for tobacco divestment among super funds and disentangling the financial world from the harmful product.

“This has contributed to 14 Australian super funds divesting tobacco stocks worth more than one billion dollars,” she wrote in a 2014 submission to Treasury. “With several billion dollars still invested in tobacco, I am committed to continuing this work.

It’s a push she continues today with the charity Tobacco Free Portfolios.

Image via unsplash.