A whopping 46 per cent of respondents in a recent Super Review survey described the uptake of their SRI or ethical option as poor.
The survey, conducted last month, found that only 26 per cent of funds described the uptake as being reasonable or good.
Only one fund, Christian Super, described member response to its SRI options as “exceptional”. The fund’s CEO Paul Beckmann attributes this result to the Ethical Growth option’s philosophical alignment with Christian values and to this option being the fund’s default option.
Christian Super launched its first ethical option in July 2001 in a bid to allow members to integrate personal Christian values into their investment strategy. The fund now has three SRI options, the last of which was added in April this year. These “seek out opportunities for positive influence” and while generally striving to avoid investments of detrimental effect, they specifically exclude involvement in the sex industry, child labour and slavery.
Beckmann notes that Christian Super plans to further develop ethical investments as a strong differentiator in the market place. It will also refine its strategies and extend SRI to other asset classes and possibly to apply across all the fund’s assets.
The Catholic Superannuation and Retirement Fund, however, was one of two funds in our survey to describe members’ uptake as “slow, but gradually improving”. The fund’s general manager Greg Cantor believes this could be because members are probably used to — and comfortable with — their current situation.
One fund, CONNECT, said while it had sought interest on an SRI option, it had never launched one due to lack of member interest.
Fund executives attributed the poor uptake of SRI options towards general apathy to ethical issues and a perception that investment performance would suffer if an SRI option was chosen.
Other reasons cited were a lack of understanding by members of what SRI entails, the aggressive shares only nature of many of the SRI options offered and the poor investment market returns of these since they were introduced. (While the earliest SRI option in our survey was launched in 1997, two thirds of the offerings were introduced between 2001 and 2002.)
JUST Super’s communications manager Jenni Tucker noted: “The reason that we have had such a low response is due to a number of factors. Members place high value on having the ability to make a sustainable investment choice. However our experience has shown that this does not necessarily result in members utilising the choice.
“The other factor that may affect uptake could be that we have not recently conducted a marketing and education campaign focusing on our sustainable investment options. Our sustainable investment options are both high-risk options, which may lower the appeal for conservative members of our fund.”
The initial uptake of JUST Super’s Sustainable Australian Shares and Sustainable International Shares was good, but, according to Tucker, this has not grown and the options are currently selected by less than 1 per cent of the fund’s membership.
So what do the funds in our survey plan to do in the future about their SRI options?
“We plan to further educate members on our sustainable investment options, starting with our end of year newsletter,” says Tucker.
NGS Super has a similar response: “We continue to provide educational support so that members can understand SRI and make an informed decision if they choose to invest in socially responsible investments.”
When it came to the screens used by the super funds in our survey, 40 per cent used a best-of-breed positive screen. Only one did not use a positive screen while only two had no negative screens.
Uranium came up as the most popular negative screen, followed by tobacco. Other widely used negative screens included alcohol, gambling, armaments and environmental offenders. Not surprisingly, the Catholic Superannuation and Retirement Fund also excluded contraceptives.
