VicSuper, the Australian superannuation fund with A$16.4bn (€11.3bn) in assets, is to offer its members a responsible investment option from next year which will be fossil fuel free.
Melbourne-based VicSuper has decided to introduce the new product after extensive research with key employers and thousand of members on what social and environmental issues mattered to them.
Speaking to RI, Kirsten Simpson, Corporate Sustainability Manager at VicSuper, said the research found that climate change and fossil fuels were the most concerning issues. “Everybody we spoke to mentioned it,” she said. “And a small number of members are hyper-engaged on the issue.”
The responsible investment option, which will be launched to members in 2017, will screen out companies involved in fossil fuel activities, direct fossil fuel production and transport and those who hold fossil fuel reserves. Other screens include uranium, weapons, tobacco, gambling, human rights/labour issues, environmental destruction, ESG controversies, alcohol and GMO.
After the screens have been applied, equities will be chosen using a best of sector approach. All other asset classes will apply ESG integration.
Simpson said it was one of the strongest screens compared with comparable super funds in Australia.“In the Australian market place there are ethical funds like Fossil Free Super and Australian Ethical whose investment philosophy is values first, and mainstream super funds offering a screen or best of sector. Our responsible investment option sits in the middle of our mainstream competitors and ethical funds, while being priced the same as our competitors.”
The move comes as VicSuper is developing a strategy on the issue of climate change more broadly. Earlier this year, it set up a ‘Climate Change and Investments Steering Committee’ to be headed by Michael Dundon, the scheme’s chief executive.
Dundon says the committee will “establish their approach to the management of climate change risk across the investment portfolio and clear public position on climate change that is consistent with their investment objectives and activities, supplemented with transparent progress reporting.”
Last year, VicSuper’s reduced the carbon intensity of its equities portfolio by 17% and invested AUD$900m in renewable energy, forestry and sustainable agriculture assets that have positive impacts on climate change.
Next year it plans to review strategies for reducing climate impacts and their implications for investment returns; and review how it engages with investment managers, its holdings and policy makers on climate risk.