Australian super funds which have incorporated responsible investment have seen better results than their peers since responsible investment is no longer at the perimeter of the investment philosophy, the Responsible Investment Association of Australasia (RIAA) has found.
The study, which looked at 57 largest superannuation funds and accounted for $1.75 trillion in assets under management (AUM), found that responsibly invested super funds have managed to outperform their peers over one, three and five-year time frames.
At the same time, RIAA compared the MySuper performance of those super funds which employed responsible investment strategies with the MySuper options of those super funds that are not and discovered that the MySuper option of responsible investment super funds outperform the MySuper option of non-RI super funds over five, three and one-year period.
“This year’s report shows that Australia’s largest superannuation funds – including industry, retail, corporate and public sector funds – are ramping up their engagement in responsible investing to drive superior financial performance, reduce risk, and deliver better outcomes for their members and beneficiaries,” Simon O’Connor, RIAA’s chief executive, said.
The study revealed that 81% of Australia’s largest super funds remained committed to responsible investment (up from 70% in 2016), and 72% reported annually on responsible investment activity (up from 44% in 2016), highlighting how responsible investing is increasingly being embedded within Australian investment markets.
The report also identified 13 Australian super funds identified as leaders for articulating and demonstrating a comprehensive approach to responsible investment – Australian Ethical, AustralianSuper, CareSuper, Cbus, Christian Super, First State Super, Future Fund, Future Super, HESTA, Local Government Super, Unisuper, VicSuper and Vision Super – along with NZ Super Fund.
Further key findings included:
The research house has offered a silver lining after super fund returns saw the end of a five-month streak last month.
A survey of almost 6,000 fund members has identified weakening retirement confidence, particularly among those under 55 years of age, signalling an opportunity for super funds to better engage with members on their retirement journey.
The funds have confirmed the signing of a successor fund transfer deed, moving closer to creating a new $29 billion entity.
A number of measures, including super on Paid Parental Leave, funding to recover unpaid super, and frameworks to encourage investment in the energy transition, have been welcomed by the superannuation industry.
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