The superannuation reform that could transform a brake on Australia’s future into an accelerator 

The government’s economic reform roundtable this week focused on the levers of productivity from housing approvals, skills, and tax. 

But one lever with more potential than all three combined barely rated a mention: the way Australia’s Your Future, Your Super (YFYS) benchmarks steer $3.9 trillion of retirement savings. 

With a small reform, YFYS could shift from being a brake on investment to an accelerator of housing, energy and innovation. 

That’s a productivity dividend just waiting to be unlocked, to future-proof the industry itself and its members. 

Across finance, government, and industry, there’s a growing consensus that investors need clearer, forward-looking climate data to make smart investment decisions.

A potential ‘game-changer’

The super industry lifts GDP, boosts productivity and according to the Association of Superannuation Funds of Australia, adds a $2,500 “productivity dividend” to the average pre-tax wage each year. 

It could be a game-changer for economic resilience, productivity and the clean energy transition – if Australia lets it.

The YFYS performance test checks if certain super products give good returns compared to market benchmarks. 

Currently, those benchmarks are based on high-emitting indices, limiting how much funds can invest in climate-aligned, forward-looking options while still passing the test. 

Currently, it locks funds into benchmarks that ignore whether an investment is cutting emissions or positioned for the transition, missing key signals about future performance and long-term investor value.

That means that even when super funds want to invest in future-focused opportunities, like renewable energy, sustainable housing or clean transport, they risk being penalised simply because those investments don’t match lagging benchmarks.

Unprecedented climate investment data available

Between 2025 and 2027, Australia will deliver unprecedented levels of climate investment intelligence, including;

• The Climate-related Financial Disclosures (CRFD) regime, which began in January 2025
• The piloting of Australia’s sustainable finance taxonomy to define what counts as climate-aligned investment
• Sectoral transition pathways published by the Climate Change Authority, underpinned by CSIRO and Climateworks Centre research
• Transition plan guidance from Treasury, due at the end of 2025
• Sustainable investment product labels guidance due in 2027.

The Sustainable Finance Roadmap has brought these efforts together into a coordinated national strategy, placing Australia at the forefront of dynamic, economy-wide climate investment intelligence. 

Now that the data investors have been looking for is available, will Australia use it?

Productivity: The magic that happens with data and action

In the lead up to this weeks roundtable Treasurer Jim Chalmers warned that productive capital per worker is falling – a reversal that significantly weakens long-term growth. 

Simultaneously, AustralianSuper chair Don Russell has made it clear that members shouldn’t shoulder all the risk for nation-building projects.

Both are pointing to the same fixable problem: Australia is not deploying capital where the future economy needs it most and where the potential returns lie.

Right now, there’s a rare alignment between government, finance and the vast majority of Australia’s super funds.

Now is the moment to fix the YFYS test. This isn’t just a tweak – it’s a necessary evolution.

YFYS benchmarks are lagging

By design, YFYS benchmarks are backward-looking. 

For listed equities, those that are open to be traded via public stock exchanges or markets, they are based primarily on market capitalisation, essentially rewarding size. 

These benchmarks don’t reflect how well a company is preparing for the transition to a net zero economy or whether it’s investing to avoid future risk.

For unlisted assets, those not traded on the stock exchange, like toll roads, airports and energy grids, the benchmarks are effectively climate-blind. 

They offer no signal about whether an asset contributes to Australia’s clean energy transition or positions portfolios for future resilience. 

That limits the ability to accurately assess long-term value and performance – and keeps climate-aligned capital sitting on the sidelines.

Building the right benchmarks

Unlisted assets currently benchmarked in the YFYS test reflect a narrow, climate-unaware slice of the investable universe. 

This creates real challenges for super funds seeking to invest in transition-enabling infrastructure like renewable energy, sustainable housing, or clean transport.

To fix this, Australia needs to build new benchmarks, aligned with the upcoming sustainable investment product labels, such as a clean energy infrastructure index to allow super funds to measure against assets that align with national climate goals and global investor demand.

The capital, the data, and the policy framework already exist. What’s missing is the right benchmark.

One change could unlock capital

There’s growing consensus that the YFYS test needs to catch up with the investment environment it regulates.

Finance, government, and industry have delivered the data, showing where the big opportunities are. 

But funds are still assessed against benchmarks that ignore it. 

Climateworks research shows that one update can help – adding an optional Column B of climate-aligned benchmarks for each asset class in the YFYS test, that sits alongside the existing benchmarks (Column A) that support the status quo. 

• Column A: Traditional benchmarks – constructed using market capitalisation for equities and generalised universe for unlisted assets
  
• Column B: Climate benchmarks – constructed using forward-looking, transition-informed data as well as traditional indices metrics

Funds could opt into Column B for a portion of their fund, where it aligns with their strategy. 

Where climate indices don’t yet exist like for clean energy infrastructure – they can be built. 

Climateworks has already mapped the gaps and confirmed strong market appetite. 

Importantly, benchmarks must also align with emerging regulatory and market frameworks, including Australia’s development of sustainable investment product labels. 

This change would do two key things:

1. Put climate data to work: Funds could act on transition plans, CRFD disclosures, and sector pathways – rewarding alignment and managing risk.
   
2. Unlock partnership capital: Blended finance models, already used overseas and by the CEFC and NZEA – could be scaled up. But without fit-for-purpose benchmarks, many super funds can’t participate.

Why this matters – especially for members

Unlocking investment into future-focused sectors is a productivity issue and a member returns issue. 

A forward-looking performance test is a necessary enabler of both.

The Association of Superannuation Funds of Australia (ASFA) has called for YFYS to reflect forward-looking sectors like clean energy and advanced manufacturing. The Investor Group on Climate Change says that “increasing action is needed on adaptation and resilience to safeguard the value of investments.

Both are right.

YFYS reform won’t solve every problem.

But without it, much of the government’s data will go unused and our climate commitments unmet.

Sector pathways and plans will be unused. Transition plans will be disclosed, but disregarded. The taxonomy will define investable opportunities – — but funds won’t be able to act.

If the performance test fails to evolve, it won’t just fall behind, it will actively block capital from supporting the productive, resilient, climate-aligned economy Australia is trying to build.

Not every super fund will move first. But those that do will lead, allocating capital where the transition is going, not where the market has been. That’s how they’ll capitalise on long-term value for members while accelerating Australia’s economic transition.

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