Superannuation funds in Australia are increasingly applying multiple responsible investment strategies across their portfolios, rather than offering a discrete responsible investment option to members, according to the 2015 Responsible Investment Benchmark Report for Australia.
The Benchmark Report, compiled by membership body Responsible Investment Association Australasia (RIAA), notes a “significant shift” where it is now not uncommon for a super fund to apply ESG integration across the fund, with one or two exclusions, as well as having some sustainability themed mandates and undertaking corporate engagement.
There is also a rise in multiple responsible investment strategies being overlaid across the entire portfolio by super funds.
The five largest superannuation funds by core responsible investment assets under management are Local Government Super, UniSuper, VicSuper, Australian Ethical and Christian Super who roughly manage AU$13bn (€8.6bn).
Overall, the report finds AU$31.6bn of assets in Australia are managed under core responsible investment strategies, which includes screening, sustainability themed investments and impact investment; which grew by over 40% from 2013 to 2014
Investments undertaking ESG integration represent AU$597.9bn assets under management.
The authors of the report say this “reflects the strongtake-up of ESG integration by many of Australia’s largest asset managers” influenced by companies’ poor management of ESG issues, demand from consumers, activism and fiduciary duty in the light of growing ESG megatrends such as climate change.
For the first time this year, the RIAA undertook a review and assessment of asset managers who are self-declared responsible investors against a framework based on global definitions of leading practice in ESG integration.
Those asset managers scoring above 80% on ESG integration assessment are: AMP Capital, ATI Asset Management, Colonial First State Global Asset Management, BT Financial Group, IFM Investors, Investa Property Group, Lend Lease Investment Management, Perennial Investment Partners, Perpetual Investments, QIC and Solaris Investment Management.
Total assets managed under responsible investment strategies have grown to encompass 50% of Australian total assets under management, at A$629.5bn as at 31 December 2014.
The data in the report was compiled by auditors EY and covers the calendar year 2014. The report was sponsored by Australian Ethical Investment, the NZ$30bn New Zealand Superannuation Fund, wealth manager BT Financial Group and Northern Trust Asset Management.
The RIAA represents over 150 members managing more than A$500bn in assets. Link