Retiring Soon? Here’s Why Your Super’s Climate Impact Matters

If you’re approaching retirement, chances are you’ve spent decades building your super. But have you ever wondered what your retirement savings are actually funding or what kind of world those investments are helping to create?

Two new reports from Climateworks Centre and the Monash Centre for Financial Studies reveal that how your super is invested could influence both your future income and the planet you’ll retire on (Climateworks, 2025).

Why this matters for retirees

Australia’s super system has been designed to protect savers from underperformance and high fees. But the benchmarks used to test super funds, part of the Your Future, Your Super (YSYS)performance test, are heavily weighted toward traditional, carbon-intensive sectors.

That means many funds are being measured against yesterday’s economy, not tomorrow’s. And while this system has cleaned up poor-performing funds, it’s also making it harder for funds to invest in the growing industries that will drive Australia’s economic transition (Climateworks, 2025). For retirees and soon-to-be retirees, that’s a problem because the same industries driving climate risk also carry financial risk.

The good news: climate-aligned investing performs just as well

Research from Monash Centre for Financial Studies found that super funds investing in climate-aligned indices perform just as well, if not better, than those tracking traditional benchmarks (Monash Centre for Financial Studies, 2025).

Here’s what the numbers show:

• Australian shares: Climate-aligned indices outperformed the ASX 300 over one-, three-, five-, and seven-year periods.

• Global shares: The MSCI World Climate Change Index returned 17.54% per year, which is higher than the standard MSCI World Index at 16.23%.

• Fixed income: Climate-aligned bond portfolios achieved nearly identical returns to traditional ones while cutting exposure to fossil fuel issuers.

Most importantly, these climate-aligned portfolios had 15–65% lower carbon intensity. In other words, less climate risk with no compromise on return (Climateworks, 2025).

What other countries are getting right

Super-sized funds overseas are already moving. Climateworks’ global study looked at pension funds like CalSTRS (US), LGPS Central (UK), and the Church of England Pensions Board, which have successfully switched to climate benchmarks. Every one of them described the shift as very worthwhile (Climateworks, 2025). These funds found that climate-aligned investing:

• Protected against long-term risk.

• Delivered strong financial returns.

• Attracted positive feedback from members.

• Aligned portfolios with net zero targets.

The future of your future fund

Australia’s super industry now holds more than $4.1 trillion, set to grow to $34 trillion by 2061. Even a small shift toward climate-aware investing could unlock billions for renewable energy, sustainable infrastructure, and future-focused industries (Climateworks, 2025).

Introducing optional climate indices into the super performance test would give funds the flexibility to invest in a way that protects both your retirement and Australia’s long-term prosperity. Because when you retire, you’ll want to know your savings didn’t just grow but they helped build a world worth retiring into. At UNLESS, we call that making your money make a difference.

References

Climateworks Centre (2025). Risks, Returns and Decarbonisation: Opportunities from Climate Indices. https://www.climateworkscentre.org/wp-content/uploads/2025/11/Risks-returns-and-decarbonisation-summary-report-Climateworks-Centre-November-2025.pdf

Climateworks Centre (2025). Implementing Climate Indices: Real Stories from Global Asset Owners. https://www.climateworkscentre.org/wp-content/uploads/2025/11/Implementing-climate-indices-case-studies-Climateworks-Centre-November-2025.pdf

Monash Centre for Financial Studies (2025). Performance of Climate-Aligned vs. CPPP Benchmark Indices under APRA's Performance Test. https://www.monash.edu/__data/assets/pdf_file/0012/4169874/Comparison_of_Climate-Aligned_vs_CPPP_Benchmarks_under_APRAs_Performance_Test_October_25.pdf

Responsible Investment Association Australasia (2024). From Values to Riches 2024: Charting Consumer Demand for Responsible Investing in Australia. https://www.responsibleinvestment.org/research-and-resources/resource/from-values-to-riches-2024-charting-consumer-demand-for-responsible-investing-in-australia

---