By Act on Climate Collective Member August Wylynko
Our Sovereign Wealth Fund is hypocritical and financially irresponsible.
The Australian Government claims to be preparing communities for climate change and worsening disasters, yet continues to invest billions in companies directly causing the climate crisis and ecosystem collapse.
Australia’s Sovereign Wealth Fund – designed for our collective future – is heavily invested in fossil fuels, mining, military and weapons manufacturing. Dividends and the above-average return on investment of 15% in the last 12 months are therefore directly tied to these companies' profits. As the government’s supposedly most significant financial asset, it needs to be considered in the climate crisis conversation.
Following the money
The Disaster Ready Fund (DRF) is a government-owned and -managed fund, designed to fund adaptation and disaster risk reduction projects. Originally named the ‘Emergency Response Fund’, it was transitioned to the ‘Disaster Ready Fund’ in 2019 for the purpose of investing in adaptation and risk reduction projects. In the past few years, around $200 million per year were drawn out and distributed via grants, decreasing to $140 million this year.
What’s in the portfolio
Within the DRF, over $28 million is invested in fossil fuel companies and $10 million in arms manufacturers.
The portfolio includes:
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$7 million invested in Woodside - a major gas company
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$1.6 million in APA Group – a company responsible for gas pipelines, including the proposed NEA pipeline enabling further fracking in the NT
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$350,000 in Alcoa – a company responsible for strip mining and selling gallium to weapons manufacturing
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$8.4 million in Rio Tinto, which instigated a civil war in PNG that lasted for 10 years, and blew up Juukan Gorge
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$40.5 million in BHP
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$5.5 million in ExxonMobil
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$3.1 million in Santos
Across the entire Sovereign Wealth Fund, over $730 million is invested in Woodside, $320 million in Santos, $158 million in APA Group, $20 million in Elbit Systems, and $30 million in Alcoa.
There is also $4 billion invested in BHP, $5 billion in ANZ. Therefore, investments are directly tied to funding fossil fuel projects. Another $4.4 billion is invested in BlackRock, which invests in fossil fuels and weapons.
How are we supposed to be prepared, be ready for the future, if the money that is supposed to help us adapt for it is also supporting companies that are actively destroying it?
The Future Fund has been criticised previously by David Shoebridge and the Greens, APAN, Market Forces, the ABC and Barbara Pocock for investing in weapons and fossil fuels, but data from June 2026 shows that the Government continues to invest in these industries, citing returns on investment as the key priority. This makes us question whether the fund managers are just not seeing the hypocrisy, or actively ignoring it.
The Responsible Investment Policy – is active engagement possible?
The Sovereign Wealth Funds’ current Responsible Investment Policy (RIP) states that climate change, nature and biodiversity risks are key priorities. And yet, the companies in the Future Fund do not reflect this - Woodside, Santos, Palantir, ANZ and BlackRock are all part of the portfolio.
Exchange Traded Funds (ETF’s) often have negative screening processes that lead to the exclusion of certain companies. The RIP states that tobacco and controversial weapons are screened out of the Future Fund. Yet, Elbit and Palantir are still included.
Instead of adding other sectors (such as the fossil fuel industry) to the exclusion list, the RIP states that it engages in ‘stewardship’ practices, including active engagement with companies, using voting power if the companies conflict with its policy, and monitoring and escalating if engagement does not lead to meaningful improvements. A 2024 study by Market Forces found that the Future Fund failed to use their voting power to push three of the most climate risk-exposed companies to end fossil fuel expansion.
When a company’s core business model depends on exploitative, harmful products, how could a dialogue ever lead to meaningful change? Weapons are designed to harm. Investments are premised on constant economic growth, requiring further fossil fuel extraction and further killing to sell more. Weapons companies will always profit from war. Investor activism is fundamentally flawed.
Why divest?
Divestment is the process of removing investments in a company. Globally, it has been used as a tool within the boycott, divest, sanction movement as a way to financially harm a company and ruin its social license.
‘The hope is that divestment is one way to weaken [fossil fuel] companies—financially, but even more politically. If institutions like colleges and churches turn them into pariahs, their two-decade old chokehold on politics in DC and other capitals will start to slip.’ Bill McKibben
When a fund as large as the DRF or the FF divests from a company, it can have a sizable impact on the viability of the company, alongside its cultural image. Over the past five years, the Future Fund has divested from some controversial or ‘morally dubious’ companies. This demonstrates their understanding that divestment is indeed an important way to signal that profit should not come at the expense of human or environmental ethics.
Divestment is an essential mechanism to stop this continued blatant contradiction and profiting.
Financial returns, for whom?
The funds are not only ethically and environmentally irresponsible, but also financially irresponsible.
Fossil fuel investments are increasingly facing risks from energy transition requirements, policy, market conditions, litigation and stranded assets. Companies have also faced remediation obligations and financial consequences, including compensation to communities. For example, the Rio Tinto Ranger Uranium mine costs $2.2 billion in decontamination, and BHP paid out billions to a community when a tailings dam collapsed in Brazil, which had repercussions on its share price.
Australians will ultimately pay the price in a decreased investment portfolio AND through the disasters that climate change is exacerbating.
If one cares so deeply about the Return on Investment, one must consider long-term environmental risk to the companies, which arise from and are worsened by the companies' very own operations.
The Government and Board of Guardians must consider the broader context in which this fund operates, and the future risks it may face if it continues to be invested in weapons and fossil fuels. This leaves out key considerations that will not only impact the portfolio but lead to higher costs down the road for the government. Disaster recovery costs, biodiversity loss, health costs, insurance costs, infrastructure damage, heat deaths… why are financial returns measured, while social costs are externalised?
Activists have suggested that rather than just divesting from harmful industries and companies, the public should have an active role in deciding on investments. This could be people with lived experience of disaster and community leaders who understand the impacts of investment decisions first-hand and who can represent community interests.
What we demand:
Polluters should pay, not profit!
Instead of polluters benefiting from the fund, they should be made to pay into a fund that supports resilience, risk reduction and adaptation projects (while they transition from fossil fuels - this is not an encouragement of continual extraction). This could exist as a separate fund such as the compensation fund advocated for by Tipping Point. Fossil fuels have created this crisis - and while mitigation measures and recovery funds are vital, investment in adaptation is the most cost-effective and community-oriented approach to reducing risk. This is why fossil fuel companies have a responsibility to pay for adaptation.
Our asks of the Government
(1) Divest from destructive industries
We ask the federal Government to review its investments and ensure that public funds earmarked for climate resilience and disaster preparation are not actively supporting the very industries driving environmental degradation. Current returns on fossil fuel companies should not be sufficient justification for maintaining investments in companies that will face transition risk, environmental liabilities and public backlash. We demand that companies that actively engage in enabling war crimes and worsening the climate crisis should be excluded from the fund’s portfolio.
(2) Polluters must pay into an adaptation and disaster risk reduction fund, rather than profit from it
We demand increased spending on adaptation, resilience and risk reduction paid for with polluters' profits, and that polluters are divested from within the DRF.
SIGN OUR PETITION TO STOP THE DISASTER HYPOCRISY HERE.
This campaign is also in support of other campaigns that are targeting divestment of the Future Fund. This includes the Redline Package and the APAN campaign, which both demand the government divest from weapons and illegal settlements.
This article is an opinion piece by Collective members and does not reflect the official opinions of Friends of the Earth Australia
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