Australians among the most active ESG investors globally

Published on
June 5, 2019
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Australians among the most active ESG investors globally

Australian investors currently have $30 billion dollars invested in products that are specifically created as an ESG (environmental, social and governance) offering, which has grown by 37% in the 12 months to December 2018. Alongside this, balanced ESG superannuation options outperformed other balanced options in the 12 months to April 2019.

Australia currently has 141 signed and active ESG investmentproviders that have products aligning with the United NationsPrinciples for Responsible Investment (UNPRI), making Australia thefourth most active country for ESG investment awareness.

One quarter of Australia's ESG investment providers aresuperannuation funds and almost half of Australia's superannuationsavings are overseen by funds and investment managers that followESG investment principles.

These insights are revealed by Rainmaker Information, whichpublishes the superannuation information portal www.selectingsuper.com.au.

The latest analysis further indicates that ESG superannuationinvestment options are among some of the better performing optionsacross one, three, five and ten years.

AustralianSuper's 'Socially Aware' option isthe best option over 10 years in the balanced sector, HESTA's'Eco-Pool' growth option is the fourth best over tenyears and fifth best over five years in the growth sector, while WASuper's 'Sustainable Future' option is the sixthbest balanced option. This performance is all relative to the threeyears to April 2019.

Best performing ESG options 5 year return p.a. to April 2019
HESTA - Eco-Pool 10.3%
Australian Ethical Retail Superannuation Fund Employer - International shares

9.79%

UniSuper - Sustainable High Growth

9.74%

AMP SignatureSuper - Responsible Investment Leaders international Share

9.61%

Mercer Super Trust Corporate Super Division - Mercer Socially Responsible Shares

7.53%

Christian Super - Ethical High Growth

7.39%

NGS Super - Socially Responsible Diversified

7.36%

Equip MyFuture - Sustainable Responsible Investments

7.32%

WA Super - Sustainable Future

7.24%

Lutheran Super - High Growth All Australian Shares Socially Responsible Investment 7.05%
Source: Rainmaker Information

Alex Dunnin, Executive Director of Research at RainmakerInformation explains "these results show that investors giveup nothing when they invest according to ESG principles, though afund following ESG principles should never be used as an excuse forunder-performance."

Supporting this is a 0.6% performance gap in favour of ESGoptions over the one year period to April 2019.

Biggest super funds with ESG options

Total ESG FUM ($M)

UniSuper

3,875

AustralianSuper

2,348

Christian Super

1,514

HESTA

862

VicSuper

465

Source: Rainmaker Information

"And this is the point of ESG - it's all abouttaking into account the long term risks which must includeenvironmental and sustainability factors. The debate about ESG haslong moved on from having to defend investing this way. In fact,it's now the other way around - how can long-run investorsnot take these factors into account?"

Dunnin added that "the increase in funds invested intoESG related products as well as an increase in the number of superfunds following these principles across their whole portfoliohighlights that following ESG principles is simply good practice.It's no coincidence that the Reserve Bank and thesuperannuation regulator have the same view on this."

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