Super funds with ESG investments snag greater market share, higher returns: RIAA

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on December 02, 2021 Fact Checked
Super funds with ESG investments snag greater market share, higher returns: RIAA

Australian super funds investing responsibly deliver stronger investment returns than their peers, a new report has found.

Research released Thursday by the Responsible Investment Association Australasia (RIAA), details the average performance of leading My Super responsible investment funds outperformed traditional super funds in their default products over a seven year span. 

The increase in performance saw responsible funds grow returns by 87 basis points (0.87%) over three years, 74 basis points (0.74%) over five years and 56 basis points (0.56%) over seven years. 

Performance of Responsible Super Leaders.JPG

The Responsible Investment Super Study 2021 covers 53 asset owners, including the largest 48 superannuation funds in Australia regulated by the Australian Prudential Regulation Authority (APRA), as well as five other asset owners.

The study found for the first time responsible investment approaches are influencing strategic asset allocation for the majority of super funds, up to 55% from 39% in 2019.

This means that responsible investment is considered when allocation between different asset classes is rebalanced to meet financial return targets, reflect risk tolerance and time.

Percentage of Super Funds.JPG

Source: RIAA

RIAA CEO Simon O'Connor said this year’s report shows super funds that are doing responsible investment well, are seeing their funds grow, leaving 'laggards' at risk of losing market share.

"Australians are realising the often superior financial performance of leading responsible investment super funds and are moving their money to reap not only the benefits for society and the environment, but their retirement savings as well," Mr O'Connor said.

The study found Australian super funds are improving their responsible investment practices, with 42% of total super assets in Australia covered by funds with such practices in 2020.

Further, the study showed that in the face of rising public concern and increasing financial materiality of climate change, 92% of super funds show that climate risk is actively assessed at a trustee/board level; up from 74% in 2019 and 64% in 2018.

Global Head of Sustainability for investment management company PIMCO, Ryan Korinke, said asset owners in Australia and New Zealand are bellwethers for sustainable investing in the Asia region and globally.

"This makes the results of this study showing their increasing commitment to responsible investment practices, particularly encouraging,” Mr Korinke said.


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Jacob Cocciolone joined the Savings team in 2021 as a Finance Journalist. Driven by a passion for keeping Australians up to date with the latest financial news and trends, his areas of interest include financial technology, investing, property and motoring.

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