Invest
Are ethical investing benchmarks too low?
Being the best isn’t enough when it comes to ethical and sustainable investing, a super fund has said, arguing that even slight exposure is still exposure.
Are ethical investing benchmarks too low?
Being the best isn’t enough when it comes to ethical and sustainable investing, a super fund has said, arguing that even slight exposure is still exposure.
Future Super managing director, Simon Sheikh has lambasted funds that accept exposure to non-ESG (environmental, social and governance) provided that the majority of their exposure is ESG-compliant.
Speaking at a BetaShares briefing in Sydney on Wednesday, he argued that while investors may have different values, “they don't necessarily have different ways they'd like to see their values implemented by their fund managers”.
“And this, I think, is a mistake that the funds management industry and some of the larger players have made, that is now being rectified.
“Things like materiality thresholds, for example, don't make much sense to the retail investor. If the retail investor is concerned about gambling but they invest in a company that has exposure [to gambling] like Woolworths to 11,000 to 13,000 poker machines, that doesn't add up.”
However, material thresholds which say that if less than 30 per cent of revenue is directed that way, then “it’s okay”, have been the historic practice.
“That’s what's held the growth of this sector back... people have different values, but our job as product engineers is to try to implement those values in the best way possible and to try and give as much choice.”
Chair of Future Investments at Future Super, Mark Woodall added that “transparency is critical”. He said Millennial investors in particular want “true to label” investments.
“They want to know that when you say no coal, you mean no coal. When you say no animal cruelty, you mean no animal cruelty. Not 25 per cent of a company’s activities can fall into the ‘bad stuff’, because the other 75 per cent is okay.
“That’s not okay. And when they look at this, they do want the positive as well as the negative… they want to put their money to work in things that they think are going to do well financially and morally.”
Vision Super last month argued that divesting from non-ESG compliant sectors is not always easy, or even the right choice.
Currently, Vision Super only invests in companies with carbon exposures 70 per cent lower than the rest of the market. The carbon intensity of the fund's equities portfolio is also about 25 per cent lower than the index.
In its corporate responsibility report, it noted that while it is a “proud signatory” of the Paris Pledge to commit to limit an increase in global temperature to two degrees, the actual ability to completely divest from fossil fuels is difficult due to the sector’s prevalence in the Australian economy.
Additionally, Vision Super argued that by divesting it would lose a seat at the table and the ability to influence companies’ decisions. Furthermore, it contended that even if it did divest, that funding hole would be filled up with other investors.
RELATED ARTICLES
Property
New investment platform Arkus allows Australians to invest in property for just $1
In a groundbreaking move to democratise investment in property-backed mortgage funds, GPS Investment Fund Limited has launched Arkus™, a retail investment platform designed to make investing ...Read more
Property
Help to Buy goes live: What 40,000 new buyers mean for banks, builders and the bottom line
Australia’s Help to Buy has opened, lowering the deposit hurdle to 2 per cent and aiming to support up to 40,000 households over four years. That single policy lever will reverberate through mortgage ...Read more
Property
Australia’s mortgage knife‑fight: investors, first‑home buyers and the new rules of lender competition
The mortgage market is staying hot even as rate relief remains elusive, with investors and first‑home buyers chasing scarce stock and lenders fighting for share on price, speed and digital experienceRead more
Property
Breaking Australia’s three‑property ceiling: the finance‑first playbook for scalable portfolios
Most Australian investors don’t stall at three properties because they run out of ambition — they run out of borrowing capacity. The ceiling is a finance constraint disguised as an asset problem. The ...Read more
Property
Gen Z's secret weapon: Why their homebuying spree could flip Australia's housing market
A surprising share of younger Australians are preparing to buy despite affordability headwinds. One in three Gen Z Australians intend to purchase within a few years and 32 per cent say escaping rent ...Read more
Property
Tasmania’s pet-positive pivot: What landlords, BTR operators and insurers need to do now
Tasmania will soon require landlords to allow pets unless they can prove a valid reason to refuse. This is more than a tenancy tweak; it is a structural signal that the balance of power in rental ...Read more
Property
NSW underquoting crackdown: the compliance reset creating both cost and competitive edge
NSW is moving to sharply increase penalties for misleading price guides, including fines linked to agent commissions and maximum penalties up to $110,000. Behind the headlines sits a more ...Read more
Property
ANZ’s mortgage growth, profit slump: why volume without margin won’t pay the dividends
ANZ lifted home-lending volumes, yet profits fell under the weight of regulatory and restructuring costs—an object lesson in the futility of growth that doesn’t convert to margin and productivityRead more
Property
New investment platform Arkus allows Australians to invest in property for just $1
In a groundbreaking move to democratise investment in property-backed mortgage funds, GPS Investment Fund Limited has launched Arkus™, a retail investment platform designed to make investing ...Read more
Property
Help to Buy goes live: What 40,000 new buyers mean for banks, builders and the bottom line
Australia’s Help to Buy has opened, lowering the deposit hurdle to 2 per cent and aiming to support up to 40,000 households over four years. That single policy lever will reverberate through mortgage ...Read more
Property
Australia’s mortgage knife‑fight: investors, first‑home buyers and the new rules of lender competition
The mortgage market is staying hot even as rate relief remains elusive, with investors and first‑home buyers chasing scarce stock and lenders fighting for share on price, speed and digital experienceRead more
Property
Breaking Australia’s three‑property ceiling: the finance‑first playbook for scalable portfolios
Most Australian investors don’t stall at three properties because they run out of ambition — they run out of borrowing capacity. The ceiling is a finance constraint disguised as an asset problem. The ...Read more
Property
Gen Z's secret weapon: Why their homebuying spree could flip Australia's housing market
A surprising share of younger Australians are preparing to buy despite affordability headwinds. One in three Gen Z Australians intend to purchase within a few years and 32 per cent say escaping rent ...Read more
Property
Tasmania’s pet-positive pivot: What landlords, BTR operators and insurers need to do now
Tasmania will soon require landlords to allow pets unless they can prove a valid reason to refuse. This is more than a tenancy tweak; it is a structural signal that the balance of power in rental ...Read more
Property
NSW underquoting crackdown: the compliance reset creating both cost and competitive edge
NSW is moving to sharply increase penalties for misleading price guides, including fines linked to agent commissions and maximum penalties up to $110,000. Behind the headlines sits a more ...Read more
Property
ANZ’s mortgage growth, profit slump: why volume without margin won’t pay the dividends
ANZ lifted home-lending volumes, yet profits fell under the weight of regulatory and restructuring costs—an object lesson in the futility of growth that doesn’t convert to margin and productivityRead more
