Australia’s largest superannuation fund has divested more than $26m of shares in poker machine giant Aristocrat from its “socially aware” option, after sustained criticism of its support for the gambling industry.
The decision was made after a review of investments to ensure the fund was meeting the expectations of its ethically minded members.
On Wednesday AustralianSuper confirmed its socially aware option had a higher percentage of overall investments in Aristocrat than its default balanced fund as of 31 December.
The socially aware fund held $26.8m of Aristocrat shares, with a portfolio weighting of 0.61%. In June 2023, the weighting was 0.61%.
But on Friday, AustralianSuper confirmed the socially aware fund no longer held any shares in the poker machine giant. AustralianSuper has confirmed the shares have been sold, rather than allocated to other funds.
AustralianSuper said the decision was made to “better meet member expectations”.
Previously, the socially aware fund only excluded the tobacco industry. It has now banned investments in companies linked to gambling, nuclear weapons, animal welfare concerns and palm oil.
As part of new screening rules, the socially aware fund will not invest in companies that generate more than 5% of revenue from the gambling industry. This includes companies that “license their brand name to gambling products”.
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Despite this change, AustralianSuper’s default balanced fund, according to latest disclosures, holds $1.74bn of shares in Aristocrat. In June 2022, this option held $920m in Aristocrat shares. These shares account for 0.73% of the default fund’s overall listed investments, up from 0.54% in June 2023.
An AustralianSuper spokesperson said the fund was continuing to review Aristocrat’s “initiatives in responsible gambling”.
In recent months, AustralianSuper had been increasing its holdings in Aristocrat. The company’s latest disclosures showed the fund held more than 7% of the company’s shares. In June 2022, the fund held 5.05% of Aristocrat’s shares. It was not yet clear how the divestment announced on Friday would change that percentage.
Before the announcement, an Aristocrat spokesperson said the company offered legal products in a highly regulated industry with risk management processes.
“We’re striving to continuously improve our sustainability performance, in line with our focus on long-term business performance, the expectations of our stakeholders and our company values,” the spokesperson said.
AustralianSuper is not the only fund to have increased investments in Aristocrat, despite sustained warnings of rising gambling harm across the country.
Australian Retirement Trust had confirmed it now had about $226m in Aristocrat shares in its default balanced fund, which was described as “a modest increase over time”.
UniSuper’s holdings in Aristocrat had increased from $139m in June 2022 to $283m. The super fund described the increase as a combination of the share price rising and “an increase in funds under management in UniSuper’s balanced option”.
The value of Aristocrat shares in Aware Super’s default fund had increased from $273m to $292m since June 2023, according to latest disclosures. A spokesperson for the fund said its overall shares in Aristocrat had decreased during this period.
The Morningstar Sustainalytics executive director, Michelle Cameron, said Aristocrat was “a high-performing business averaging 7.8% net income margin over recent years, outperforming the industry average”.
“From an investor perspective it has a strong balance sheet with a history of positive returns, yet its core business in gambling is ethically highly debated and contentious from a social harm perspective,” Cameron said.
“This is the dilemma for super funds as they balance strong financial returns.”
The Alliance for Gambling Reform’s chief executive, Martin Thomas, said AustralianSuper’s divestment from its socially aware fund was “highly significant”.
“While the numbers are slight in comparison to its overall investment, the recognition from our largest superannuation fund that gambling stocks are not an appropriate investment in an ethically minded fund is highly significant,” Thomas said.
“We believe that any ethical investor should divest themselves of gambling stocks. It appears bizarre and shortsighted that investors divest themselves from oil and gas stocks but go all in on gambling stocks.”
Gamblers in New South Wales lost $2.17bn to poker machines in the first 90 days of this year. This equates to an average of $1m an hour to poker machines across the state, or more than $24m every day.
Last month, a report commissioned by the Victorian government found the social cost of gambling in the state had doubled – from $7bn in 2014-15 to $14bn in 2022-23 – despite fewer people gambling.
• In Australia, Gambling Help Online is available on 1800 858 858. The National Debt Helpline is at 1800 007 007. In the UK, support for problem gambling can be found via the NHS National Problem Gambling Clinic on 020 7381 7722, or GamCare on 0808 8020 133. In the US, call the National Council on Problem Gambling at 800-GAMBLER or text 800GAM
