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Superannuation and sustainability
Australia’s new choice of superannuation fund regime may be one of the reasons for fund members adopting short-term views of their investments, according to the president of the Australian Institute of Superannuation Trustees, .
Ryan told a recent forum in Sydney that the perceived growth in short-term decision-making among superannuation trustees might be owed to choice of fund, with employees’ decisions being based on fund performance.
“This makes short-term performance important as well, because there is more competition [between funds]. Whereas the philosophy of superannuation is long-term, this encourages short-termism,” she said.
On the question of why more superannuation fund trustees don’t choose to invest in environmentally sustainable projects such as energy infrastructure, Ryan pointed out “trustees can’t invest primarily for sustainability”.
Referring to strict regulations governing superannuation trustee’s investments, Ryan said that while trustees had become more conscious of the non-financial aspects of investment decisions, their broader obligation was to achieve investor returns.
“We must do intensive risk and return analysis to be satisfied that [any asset] will bring good returns, [as well as considering] its effect on the environment, community and employee health,” she said.
Another speaker at the forum, the association director of the , , argued that there was an increasing trend towards short-term thinking and said fund trustees had an obligation to think longer term.
“Superannuation fund trustees have a mandate to think long-term — their members will be in a super fund for upwards of 30 years,” he said.
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