A US investment manager has shared how he is impressed by the net-zero commitments of Australian super funds as American Republicans push back on ‘woke’ ESG investing.
Ecofin, a sustainable investment firm with four main strategies, has been in Australia exploring the markets and the superannuation space.
Its strategies include an Energy Transition Space, Global Renewables Infrastructure Strategy, Sustainable Listed Infrastructure Strategy, and Sustainable Water Strategy.
Greg Murphy, managing director – head of sustainability and responsible investing at Ecofin, told Super Review the demand for ESG vehicles institutionally is greater in Australia than in the US.
“Super funds have indicated they are keen on ESG and I am surprised by how many have told us they have made net-zero commitments. Ecofin is also a net-zero asset manager to align with our portfolios,” Murphy said.
“More funds here also focused on ESG across their whole mandate whereas in the US it may only be a small section of a fund.
“In the US, it really varies by state because they are worried about the political impact and about offending clients. It is about five years behind the situation in Europe where firms have to ask about a client’s sustainability preferences under MIFID regulation when giving investment advice.”
Earlier this year, Florida governor, Ron DeSantis, described ESG as being “woke” and indicated it is prioritising Liberal goals over investment returns. Other Republican states such as Louisiana and Missouri have divested their pension funds from firms that engage in ESG investing.
In March, a Republican bill to prevent super funds from basing investment decisions on climate change passed US Congress with a vote of 50–46.
Funds such as AustralianSuper, HESTA, Rest, and Aware Super have all made commitments to achieve net-zero emission by 2050.
At Cbus, the fund has also committed to reduce absolute portfolio emissions by 45 per cent by 2030 as well as the net-zero 2050 target.
Murphy said Ecofin is currently exploring which of its strategies resonates most with the Australian market and will likely launch these in an Australian-domiciled structure.
The Global Renewables Infrastructure and Energy Transitions fund are being best received by Australian super funds and consultants, he said.
The former fund invests in listed renewable infrastructure companies that own clean power generation assets and grids as well as zero-emission renewable developers globally. Meanwhile, the Energy Transition strategy invests in listed companies that facilitate more efficient resources and emission reductions and aligns with climate change mitigation goals.