Responsible Investor

Australia takes a lead on responsible investment

Support for the UNPRI is growing rapidly in Australia as investors use it as their framework for SRI.

Australia has more funds under management committed to the UN Principles for Responsible Investment (UNPRI) as a percentage of total assets than any other country. New signatories in the last months include both Goldman Sachs JBWere’s asset management arm and their corporate super fund as well as AU$18.4bn (US$16.3bn) Challenger Managed Investments. TWU Super, the industry super fund, became the 17th industry superannuation fund to join up, while the first thing that new start-up ArkX did after getting their Australian Financial Services Licence was to endorse the PRI. There are a number of reasons why. Unlike Europe and the US, Australia’s investment industry never had a deep rooted ethical investment industry; that is not to stay that ethical investment funds are not present, just that they represent a small component of the overall industry. For Australian institutional investors the establishment of the PRI provides a pragmatic framework to implement responsible investment practices, which sits well with the overall pragmatism of the industry.

For the last couple of years Australians have had the ability to choose their own superannuation fund. This has resulted in a battle for consumer loyalty between not-for-profit industry superannuation funds and retail funds. The battle has mainly focused on the traditional areas of fees, charges and investment performance, but some super funds are realizing that they will need to differentiate themselves in other areas. The impact of climate change in Australia, which is suffering its worst ever drought, has meant that responsible investment issues have come to the fore in the community mind and may in the future influence purchasing decisions.
The Australian Council of Superannuation Investors (ACSI), which represents the interests of industry super funds, has taken a strong leadership role in encouraging its members to endorse the PRI. These include the major funds: Hesta, ARIA, Australian Super and Cbus. ACSI’s leadership has galvanized the rest of the industry with both wholesale institutional investors and retail investment managers responding.

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