Super comes with a health warning

PERHAPS it could be considered a case of misleading labelling. Health Super describes itself as "the industry fund for the people who care", yet it invests members' contributions in corporations that endanger public health. As reported in The Saturday Age, three multinational tobacco companies are among the top 10 international investments by the superannuation fund set up for workers in health and community services.

By InvestSMART · 12 Dec 2011

By InvestSMART ·
12 Dec 2011

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It is hard to overstate the inappropriateness of this. While doctors and nurses work indefatigably to treat those suffering smoking-related diseases and to relieve the suffering of patients dying from lung cancer and heart disease, their hard-earned money is endorsing those whose products cause these maladies.

Like many of its competitors, Health Super does offer a "socially responsible investment option", but this too comes with a caveat: "If a company is materially involved in certain negative activities, it may be excluded from SRI options, depending on each individual investment manager's approach" which would appear to make the choice fairly meaningless.

Surely the passage of legislation mandating plain packaging for cigarettes is indication enough that the government recognises the costs to personal and economic health of these products, yet superannuation funds are not alone in taking a counterproductive approach.

In the last Senate sitting week of the year, Greens senator Richard Di Natale presented his second reading speech on the Government Investment Funds Amendment (Ethical Investments) Bill 2011. He argued that the Future Fund and other nation building funds including the Health and Hospitals Fund be required to make their investments according to ethical investment guidelines. As well as providing growth, he said, it is important that the investments should not be counter to the interests of the broader Australian community. Yet the Future Fund has invested $36.5 million in Philip Morris and $46.4 million in British American Tobacco.

Thanks to reforms by the Keating government, every Australian who has been part of the workforce since the early 1990s has superannuation. But it is fair to assume most are detached investors, knowing neither how much they have squirrelled away nor how that money is invested. The situation with Health Super should remind all investors of the importance of doing their own research and putting pressure on their fund managers not to invest in industries they deem unworthy of their support.

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Frequently Asked Questions about this Article…

Does Health Super invest in tobacco companies and why is that a concern for investors?

Yes. The article reports that Health Super has three multinational tobacco companies among its top 10 international investments. Many everyday investors find this concerning because Health Super represents workers in health and community services, and those members may view investing in tobacco firms as inconsistent with public health goals.

What does Health Super’s 'socially responsible investment' (SRI) option actually exclude?

Health Super does offer an SRI option, but the article notes a key caveat: companies may be excluded from SRI options depending on each individual investment manager’s approach. That conditional exclusion can limit how meaningful the SRI label is for investors seeking strict ethical screening.

Has the Future Fund invested in tobacco companies and how much exposure does it have?

Yes. The article states the Future Fund invested $36.5 million in Philip Morris and $46.4 million in British American Tobacco, highlighting that even government investment funds have had exposure to major tobacco companies.

What is the Government Investment Funds Amendment (Ethical Investments) Bill 2011 mentioned in the article?

The article describes the Bill, introduced in a second reading speech by Greens senator Richard Di Natale, as a proposal to require the Future Fund and other nation-building funds (including the Health and Hospitals Fund) to make investments according to ethical investment guidelines so they don’t work against broader public interest.

Why do critics say it’s inappropriate for health-sector super funds to hold tobacco stocks?

Critics argue it’s inappropriate because health workers treat smoking-related illnesses while their superannuation can be invested in companies whose products cause those diseases. The article frames this as a potentially misleading mismatch between a fund’s branding and its actual investments.

What can everyday investors do if they don’t want their superannuation invested in tobacco or other harmful industries?

The article advises investors to do their own research and put pressure on fund managers. That means checking how your super is invested, asking your fund about exclusions or SRI policies, and lobbying the trustee or switching to an option or fund aligned with your ethical preferences.

How aware are Australians about how their superannuation is invested?

According to the article, while virtually all working Australians have superannuation thanks to reforms since the early 1990s, most are ‘detached investors’ who don’t know how much they’ve saved or how that money is invested—underscoring the need for greater engagement and transparency.

Does the article suggest the government recognises the health costs of tobacco and how does that relate to super investments?

Yes. The article points to the passage of plain packaging laws as government recognition of the personal and economic health costs of tobacco. It contrasts this with the fact that some public and private super funds continue to hold tobacco investments, prompting debate about aligning investments with public health objectives.