Retirement
Super funds investing in ESG outperform peers
Australian superannuation funds engaging in environmental, social and governance strategies are outperforming their peers on a one, three and five-year time frames, new research has found.
Super funds investing in ESG outperform peers
Australian superannuation funds engaging in environmental, social and governance strategies are outperforming their peers on a one, three and five-year time frames, new research has found.
The study by the Responsible Investment Association Australasia (RIAA) has shown the results of an annual survey of Australia’s 57 largest super funds, accounting for $57 trillion in assets under management.
The study compared MySuper performance for funds employing responsible investing against the MySuper options of the funds that are not.
The 34 responsible investing funds had an average return of 7.33 per cent, slightly above the returns of non-responsible investing funds, which returned 7.31 per cent.
Over a three-year horizon, responsible investing (RI) funds outperformed non-responsible investing (non-RI) funds, 9.06 per cent compared with 8.65 per cent.
The five-year average had the greatest divergence – RI funds gave 8.14 per cent, while non-RI funds produced 7.7 per cent.
The majority (81 per cent) of funds have committed to responsible investment, up from 70 per cent three years ago. They offer a total of 88 responsible investment options – compared with 24 funds offering 54 options in 2016. Retail funds offer the largest variety of RI options per fund.
Over half (61 per cent) have at least one negative screen across the whole fund, up from a mere 34 per cent in 2016, with the most popular exclusions being tobacco and armaments, followed by fossil fuels.
Further, 72 per cent of funds report annually on their responsible investment activity, up from 44 per cent in 2016 – which the RIAA says reflects the practice being increasingly embedded in the Australian investment markets.
“The outperformance of responsible investment super funds is even more stark when we considered the performance of our Super Study leaders against the performance of the non-leaders, with outperformance of about 100 basis points over each of the three time periods,” says CEO Simon O’Connor.
Stars of responsible investing
The report highlighted 13 funds as leaders in responsible investment: Australian Ethical, AustralianSuper, CareSuper, Cbus, Christian Super, First State Super, Future Fund, Future Super, HESTA, Local Government Super, UniSuper, VicSuper and Vision Super – alongside New Zealand Super Fund.
Their average one-year return of 8.11 per cent beat the other 41 funds’ average of 7.07 per cent and the benchmark average for the 54 funds of 7.32 per cent. For three years, they produced 9.81 per cent, compared with the others’ 8.62 per cent and the benchmark of 8.9 per cent.
The leaders’ five-year return of 8.71 per cent was almost a full percentage ahead of the others’ 7.74 per cent and above the benchmark of 7.98 per cent.
“The outperformance of responsible investment super funds is even more stark when we considered the performance of our super study leaders against the performance of the non-leaders, with outperformance of about 100 basis points over each of the three time periods,” Mr O’Connor said.
“This reinforces how important the considerations of environmental, social and corporate governance factors are to delivering the best possible outcomes for super fund members.”
“This reinforces how important the consideration of ESG factors is to deliver the best possible outcomes for super fund members,” he continued.
RELATED ARTICLES
Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more
Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more
Superannuation
Aware Super slashes admin fees for retirees by up to 25 per cent
Aware Super has reduced administration fees for members with a retirement income account by up to 25 per cent and lowered the maximum annual fee. Read more
Superannuation
SuperAPI co-founder criticises Labor's superannuation tax as 'sneaky tax on young people'
The co-founder of SuperAPI has labelled Labor's proposed tax on superannuation balances above $3 million as a "sneaky tax on young people, tomorrow" disguised as a policy targeting wealthy retirees ...Read more
Superannuation
Election policies could reshape Australia's superannuation landscape, expert warns
Competing superannuation policies from Australia's major political parties could have significant implications for investors and retirees, according to a financial expert. Read more
Superannuation
Industry leaders weigh in on concessional super tax as Budget confirms $55bn investment
Changes to the taxation of superannuation earnings and contributions have drawn mixed responses from financial and payroll sector leaders, as the Federal Budget confirms over $55 billion in ...Read more
Superannuation
Call for indexation on super tax cap as $3m threshold draws criticism
A senior executive in the superannuation technology sector has criticised the Federal Government for failing to index the proposed $3 million superannuation tax cap, arguing the measure will unfairly ...Read more
Superannuation
Rest members back calls for fairer superannuation rules ahead of Federal Budget
Rest has called on the Federal Government to implement superannuation reforms aimed at improving fairness across the system, after member survey results showed strong support for a range of proposed ...Read more
Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more
Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more
Superannuation
Aware Super slashes admin fees for retirees by up to 25 per cent
Aware Super has reduced administration fees for members with a retirement income account by up to 25 per cent and lowered the maximum annual fee. Read more
Superannuation
SuperAPI co-founder criticises Labor's superannuation tax as 'sneaky tax on young people'
The co-founder of SuperAPI has labelled Labor's proposed tax on superannuation balances above $3 million as a "sneaky tax on young people, tomorrow" disguised as a policy targeting wealthy retirees ...Read more
Superannuation
Election policies could reshape Australia's superannuation landscape, expert warns
Competing superannuation policies from Australia's major political parties could have significant implications for investors and retirees, according to a financial expert. Read more
Superannuation
Industry leaders weigh in on concessional super tax as Budget confirms $55bn investment
Changes to the taxation of superannuation earnings and contributions have drawn mixed responses from financial and payroll sector leaders, as the Federal Budget confirms over $55 billion in ...Read more
Superannuation
Call for indexation on super tax cap as $3m threshold draws criticism
A senior executive in the superannuation technology sector has criticised the Federal Government for failing to index the proposed $3 million superannuation tax cap, arguing the measure will unfairly ...Read more
Superannuation
Rest members back calls for fairer superannuation rules ahead of Federal Budget
Rest has called on the Federal Government to implement superannuation reforms aimed at improving fairness across the system, after member survey results showed strong support for a range of proposed ...Read more
