AustralianSuper has been recognised by the Responsible Investment Association Australasia (RIAA) as a leading responsible investment super fund1.
The RIAA champions responsible investing and sustainable financial systems in Australia and New Zealand. Their annual study of the super sector identified AustralianSuper as a leading responsible investment super fund for its high degree of transparency and incorporation of environmental, social and governance (ESG) considerations in investment decisions.
The report classified a quarter of funds (13 out of 53) as leading responsible investment super funds. The leaders demonstrated:
- commitment to good governance and accountability;
- responsible investment approaches through ESG integration, engagement and voting activities;
- proper measurement of outcomes; and
- having a high degree of transparency.
The report also showed that the 13 leaders hold 42% of total super assets and reported that super funds that demonstrate leading responsible investment practices continue to outperform their peers financially2.
How we approach responsible investing
Andrew Gray heads up the ESG and Stewardship team at AustralianSuper. He welcomed the recognition from RIAA.
‘As one of Australia's largest Funds we’re very focused on what our ESG program needs to deliver to help members achieve their best financial position in retirement.
‘We have to invest responsibly because responsible investment issues can impact the value of our assets.’
Andrew says it’s important to act as a responsible investor both when the Fund looks to buy an asset and once it owns it.
‘We’re an active owner. This means we work with the companies we invest in to advocate for better ESG outcomes for assets.’
Clear ESG targets make companies accountable
Climate change has become a core ESG issue, particularly the push for net zero carbon emissions by 2050. As a leading responsible investor, addressing climate change is a core part of achieving global reach in the Fund’s portfolio.
A critical part of AustralianSuper’s focus on climate change is as a founder of Climate Action 100+ (CA100+). This is a US$60 trillion investor initiative driving change in the world’s largest carbon emitters.
‘We founded CA100+ in December 2017 with 4 other investors, plus the regional investor climate change networks. At that stage it was a struggle to get 150 investor signatories on board. Now there’s over 600. The momentum is huge,’ Andrew says.
‘We’re seeing success. Around half the (investor signatory) companies globally have now made net zero 2050 commitments.
‘We’re now turning our attention to what evidence these companies are showing in their progress to achieving net zero,’ he says.
Another part of CA100+ is the release of a benchmarking framework for companies which provides a 10-point checklist on how to reach net zero 2050.
Tracking our progress as a responsible investor is an important part of the work we do. As part of this AustralianSuper publishes a climate change report. One highlight is the Fund’s significant progress in reducing its carbon emissions, with the carbon intensity of its listed equities portfolio falling by 41% between 2013 and 2020.
A focus on modern slavery and human trafficking
Another core part of our ESG focus is reviewing workforce risks in company supply chains. We advocate for improved transparency in company operations to support the ethical treatment of people in the workplace.
We’ve also played a key role as a founder of Investors Against Slavery and Trafficking Asia Pacific (IAST-APAC), engaging with companies across the Asia Pacific region to detect, reduce and prevent modern slavery, labour exploitation and human trafficking. We sit on the global steering committee and have previously co-chaired the initiative.
Addressing modern slavery is now law
Australian law now requires companies with revenue of more than $100 million to produce modern slavery statements each year. These statements must outline the risks of modern slavery in companies’ operations and supply chains, and detail how they’re taking steps to reduce them.
Andrew says the statements help provide clearer insights into companies the Fund may invest in.
‘We don’t want companies to put their head in the sand and pretend there aren’t any issues. Supply chains are complex,’ he says.
‘By knowing the issues up front, we can help these companies to improve outcomes.’
AustralianSuper’s size and position in the sector means the Fund can initiate leading ESG practices, Andrew says.
‘As a leading responsible super fund we’re very aware of the responsibility and the opportunity that we have to really evolve this area. We try to grab that with both hands.’
- AustralianSuper has received RIAA recognition as a leading responsible investment super fund in every study conducted since it commenced in 2016.
- 87 basis points over 1 year and 56 points over 7 years. The average performance of leading responsible investment super funds’ My Super products is also better than non-leaders over 3, 5 and 7-year timeframes, RIAA report 2021. Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.