First Super appoints IFM Investors to manage ESG strategy

First Super has appointed global fund manager IFM Investors to manage a new indexed international equities strategy, focusing on ESG-related firms.

The new strategy would provide exposure to a diversified portfolio of publicly-listed global firms, excluding Australia.

It would have an aggregate overweight in firms demonstrating a strong ESG focus, particularly those with sound labour practices, human capital management and governance. 

By screening out companies with inadequate corporate governance and poor labour records, the portfolio aimed to produce long-term returns whilst prioritising social issues. 

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First Super collaborated with IFM Investors to develop a strategy which would reflect labour rights and would align with the United Nations Global Compact Labour Principles.

With a large portion of the super fund’s members working in furniture and joinery, the pulp and paper, and the timber industries, labour rights naturally became an important factor. 

Bill Watson, First Super chief executive, said: “The fund has a responsibility as a steward of members’ capital to invest in a prudent manner, and also in a socially responsible manner”.

The strategy demonstrated that strong returns could still be achieved whilst valuing ethical considerations, added Watson, contrary to criticism surrounding ESG. 

Laurence Irlicht, executive director of IFM Investors, reiterated the importance of social issues such as labour rights which had the potential to affect economic returns. 

“We were thrilled to work with First Super to develop this strategy that aims to support companies that take care of their workers and meet First Super’s required risk/return characteristics,” the director continued. 

The project was one of a number of customised ESG portfolios designed alongside investors, with an underlying purpose to provide meaningful ESG tilts within clients active risk budgets.  

First Super’s partnership with IFM Investors represented the wider prioritisation of socially responsible investment from global institutional investors to parallel members’ values.