Q+A: The hidden investing gap inside Australia’s super funds
episodePreviously titled “Q+A: The ethical investing gap inside Australia’s super funds” — renamed by the publisher on Aug 2, 2026
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What is the ethical investing gap in Australia's super funds?
Welcome to Fear and Greed Q&A, where we ask and answer questions about business, investing, economics, politics and more. I'm Sean Aylmer. Australians have more than $4 trillion sitting in superannuation funds. But do we actually know where that money is invested? A new report from Mindful Investing says billions of dollars of Australians' retirement savings are invested in industries linked to fossil fuels, weapons, human rights violations and environmental harm, despite most Australians saying they don't want their super invested in those areas. The report argues there's now a major gap between what Australians think their super funds are doing and and what's actually inside their portfolios. Barry Coates is CEO of Mindful Investing, which is working with Blue Chip Communication, a great supporter of this podcast.
Barry, welcome to Fear and Greed Q&A. Good to be here.
Why do Australians want ethical investments in their super funds?
Your report says Australians could be shocked by where their super money is invested. Broadly, what did you find?
The survey found that most Australians, a very large majority, 84% of Australians, want their funds to be invested ethically. That may mean different things for different people, but the survey was quite clear in outlining the areas that Australians wanted to avoid in their investments. So, you know, that's been our starting point that we say, here's what people want. And then we went through the analysis of what they actually get in terms of where their super funds invest.
Why is there a gap? Why is it such that people want ethical investing, and I'm using it in a very, very generic sense, yet super funds don't necessarily do that? Is that as a member, I should be doing a better job making it clear to my super fund, or is it the super fund's responsibility they're not upholding to ensure that the money is invested ethically?
Yeah, it's an interesting question.
What factors contribute to the lack of transparency in superannuation?
I think actually the real issue is a lack of transparency. So if you're a member of a super fund, you don't get to see where your money goes and you have no information that really tells you the range of your investments. And so in a way, that's why Mindful Investing is doing what we're doing, to be able to let people know that. It's kind of like if you're an informed investor, we find you're usually an ethical investor. So the other issue is that a lot of funds invest according to indexes. And particularly with the Your Super, Your Future performance test, they cling around an index and they take all the companies in that index and they just invest in that. And it's a low-cost way to invest. It's also likely to align with the performance test.
So, you know, that's a problem because they could be excluding a lot of the problematic companies, but they want to stay close to the baseline index. So that's another problem.
How does index investing affect ethical investment choices?
Is there an answer to that? I mean, that's a great point because under current regulations, super funds broadly don't want to be too far away from the mean and particularly too far below the mean and Is this something that regulation is kind of forcing on super funds a little bit?
I think it's a factor that if they're really risk averse and they want to make sure that they're close to the index, then they'll invest by the index. But many other funds that don't invest entirely according to the index will, for example, invest much more ethically, invest in things that create positive impacts in society and the environment. They still do very well. So, you know, if you look at the issue of financial returns, you don't have to cling to the index to have good financial returns. And, you know, there's a long record of research to show that. So there are ways that funds can offer people choices and alternatives. in their investing.
What role does regulation play in super fund investments?
And that's a good thing. We shouldn't have all the funds clinging to a single model and therefore there essentially ends up being no choice.
Okay, so let's go back to disclosures. When I looked at the research, my fund actually was not a strongly performing fund when it comes to staying away from some companies.
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Chapters
7 chapters
1
What is the ethical investing gap in Australia's super funds?
0:05–0:57
2
Why do Australians want ethical investments in their super funds?
0:57–2:05
3
What factors contribute to the lack of transparency in superannuation?
2:05–3:08
4
How does index investing affect ethical investment choices?
3:08–4:10
5
What role does regulation play in super fund investments?
4:10–5:10
6
How can members influence their super funds' investment practices?
5:10–6:01
7
What future trends might impact ethical investing among younger Australians?
6:01–11:23
Speakers
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