Responsible Investor

Australian super funds get rated on climate change

SuperRatings launches ‘Infinity Award’ to rate funds taking climate change seriously.

As the Australian superannuation pensions market balloons, Jeff Bresnahan, managing director of SuperRatings, which rates superannuation funds on issues such as performance and fees, says incorporation of climate change issues into investment policies is also becoming a key fund sales differentiator.
Figures from Watson Wyatt, the investment consultant showed Australian super fund assets reaching A$1.07 trillion at the end of 2007, up A$125 billion from A$940bn at the end of 2006. Since 2002, the government has required employers to contribute 9% of workers’ earnings to individual superannuation accounts. Employees can make additional voluntary contributions. In 2005, the superannuation market was liberalised giving employees the option of selecting the fund to which their employers’ compulsory contributions are made. This has resulted in a battle for consumer loyalty between not-for-profit industry superannuation funds and retail funds. SuperRatings has introduced an “Infinity Award” to label funds that are taking climate change seriously in their investment. Bresnahan said the movement of ratings agencies into rating ESG performance will mean that super funds not only need to ‘talk the talk’ but ‘walk the walk’.

“Consumers believe that climate change is important to everything that they do – and that flows into the superannuation arena. It is basically like a wave that is building and building and our belief is that ultimately consumers will have a very strong belief in the issues relating to climate change and will be looking to their various suppliers – whether it be their super funds, or their banks, or any other suppliers for that matter – to see what they are actually doing about this whole issue.” Can super funds really make a difference on climate change? “I think they can for several reasons”, says Bresnahan. “One is their reach. We’ve got 30 million superannuation accounts in Australia servicing 10 million working Australians so their reach is incredibly strong. The second part to it is that they control – not necessarily have majority control, but they have influence over – a significant number of both private and public companies and can influence through their voting position some of the issues that relate to climate change and all the related issues around it, so they have a very strong influence over companies that mums and dads obviously have no influence over so as a group they can speak quite loudly.” SuperRatings has awarded the initial ‘Infinity Award’ to Australian Ethical Retail Superannuation,

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