One of Australia’s largest superannuation funds Rest has become the latest to push for responsible environmental, social and governance (ESG) investment, as a new survey shows roughly one third of Australia’s super funds could already be considered in the ESG fold.
This week, the company launched its Sustainable Growth plan, which it claimed was one of the lowest-fee socially responsible investment (SRI) options on the market.
For members who choose the option, investments will only be made in infrastructure assets that have been identified as helping the transition to a low carbon economy, and in property assets that have demonstrated a Global Real Estate Sustainability Benchmark real estate assessment score of at least average or above.
Rest made the change following a survey of some of its 1.7 million members, in which over three-quarters expressed a moderate to strong interest in an SRI option.
Also this week, financial data company Rainmaker Information released a study showing that roughly one third of Australia’s super funds could already be considered ESG, and around 70 per cent of those were not-for-profits.
Superannuation funds that follow ESG principles collectively manage over $1.6 trillion, or roughly 71 per cent of superannuation savings, according to Rainmaker.
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Rainmaker’s director of research, Alex Dunnin said that not only were SRIs socially responsible, but also financially responsible in terms of returns for members.
“Super funds should adopt ESG principles because it makes them better super funds. Super fund trustees must always focus on the financial best interests of their members,” he said.
To support the study, Rainmaker also created a framework to define which super funds most closely met the criteria for being an ESG operator.
“With so many people talking about ESG and so many super funds and investment managers claiming to be ESG proponents, it’s important for investors that we develop markers of what this actually means,” Mr Dunnin said.