AustralianSuper, Hostplus, REST Super, UniSuper and other super funds targeted

On Wednesday the law firm wrote to 20 funds, which manage a combined $1.7 trillion and include AustralianSuper, REST Super, Hostplus, UniSuper, Aware Super and the Australian Retirement Trust, demanding that they hand over whatever information they have justifying the investment and proving they are meeting their legal duties.

The letter accused the funds of “deficiencies in accordance with international human rights principles and fiduciary obligations to act in the best financial interests of members and with the requisite degree of care, skill and diligence”.

It said Santos’ growth strategy was “financially questionable” and that the Barossa drilling breached local Indigenous communities’ economic, social and cultural rights over the Sea Country it would occur in.

The super funds were obliged under international human rights principles to “exercise [their] leverage [over Santos] to prevent or mitigate these adverse human rights impacts”. But there was “no evidence of the fund acting in accordance” with these principles, it alleged, as they continued to invest in Santos.

The members demanded the that funds explain how they planned to meet these duties.

Seven traditional owners from the Tiwi Islands and the Larrakia people, including Dennis Murphy Tipakalippa, the Munupi clan leader who last year successfully challenged Santos’ regulatory approval for the project, are also part of the super fund members’ complaint.

Santos says the Barossa project is needed to maintain exports critical to energy security for Japan and the rest of Asia and said last week that production could still start as planned in the first half of 2025, despite the regulator still not giving new approvals.

Equity Generation Lawyers associate Vidhya Karnamadakala said there had been “a wholesale failure” by these funds to listen to Indigenous people’s concerns about the project, posing a financial and legal risk for their members.

“Since 2011, institutional investors have had a responsibility to consider human rights,” she said, referring to the United Nations Guiding Principles on Business and Human Rights.

“And there’s been a blatant lack of free, prior and informed consent form traditional owners here … so legal action is certainly not out of the question if funds fail to provide adequate information.”

Risk to members’ returns

Ms Karnamadakala said pursuing the project in the face of public opposition and human rights concerns also could sting Santos’ valuation, pointing to Rio Tinto’s share price crash after the Juukan Gorge scandal. This could then put funds in breach of their legal duty to act in members’ best financial interests.

“Santos is facing operational risks, reputational risks, their social licence – these are all risks that feed into financial risk,” the lawyer said.

“Super funds really should be thinking about these costs and these risks that are intrinsically tied to respecting human rights … as the risk to Santos then affects the investments the super funds have and their financial interests.”

The legal letter follows Market Forces, which is assisting Equity Generation Lawyers with the Santos claim, finding that AMP, AustralianSuper, Australian Retirement Trust, Aware Super and Commonwealth Super Corporation were failing to use their influence over Santos and Woodside they invest in to help drive climate action despite their own ambitious environmental goals.

Commonwealth Super Corporation member Catherine Rossiter said she was concerned that her fund’s continued investment in Santos while it pushed ahead with the Barossa project would sting her savings.

“Investing in projects that are destroying the climate, and which are likely to be stranded assets, makes it less likely that members will have a safe and secure retirement,” she said.

UniSuper member Jan McNicol added: “This is not the investment policy of a socially responsible 21st century superannuation fund.”