The Ethical Investor: 80pc of Aussies want ESG in their super funds; Millennials the most vocal
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Australians are leading in the global push to see more ESG options in their retirement plans.
According to the just-released 2022 MFS Global Defined Contribution Survey, more than 80% of Aussies want to see ESG investments offered in their retirement plans, up from 74% the year prior.
This exceeds the interest shown in other global markets.
The survey also found that demand for ESG options is high in the US at 78%. In Canada it’s 72%, while in the United Kingdom the figure is 80%.
The survey also found that a correlation exists between age and demand for ESG.
Australian Baby Boomers (aged 55 to 73) displayed the greatest sentiment change of all ages and regions, with 70% wanting ESG in their super offerings, up from 65% last year.
Forty-nine per cent of those surveyed believe their superannuation fund does an adequate job of considering ESG issues when making investment decisions on their behalf; however just 43% of women agreed with this compared with 54% of men.
Demand for ESG seems to be correlated with age; i.e. the younger you are, the more likely you want to have ESG options in your super funds.
The younger age group is also more likely to think that their super fund does an adequate job of considering ESG issues when making investment decisions.
Only 15% of Milliennials said they did not want the super funds they invest in to take E, S, or G into consideration.
On the gender divide, there is little difference between men and women when it comes to wanting ESG in their super funds – with around 80% of both men and women opting for ESG options.
The MFS survey results are consistent with what’s happening elsewhere.
In Canada, the head of the C$400 billion pension fund has signalled that he will cut ties with firms that aren’t committed to their net-zero targets.
The Canada Pension Plan Investment Board’s (CPPIB) CEO John Graham said on a panel at the Bloomberg New Economy Forum in Singapore:
“We’re there as an investor and we share our expectations and use our governance rights.”
“If firms aren’t following through on their commitments, then you have to use what governance tools you have to either seek change, or we will sell at that point if we just don’t think it’s being taken seriously.”
Graham said CPPIB is “really excited” about investing in ESG, and sees it providing some of the best opportunities in the next 10 years.
In the UK, a new study commissioned by investment manager Downing LLP revealed that 54% of UK pension funds believe investing in social care can help investors meet important ESG objectives.
The pension funds interviewed, who collectively manage over £102 billion in assets, believe that the social care sector is under pressure from the weight of growing demand and funding shortfalls.
These funds believe that investing in social sector will not only alleviate some of these pressures, it will also improve their fund’s ESG credentials.
“This represents an exciting opportunity for institutional investors to help fund some of the improvements needed in the UK’s social care system, enhancing their ESG credentials, whilst also receiving a return on their investment,” said Mark Gross, head of Development Capital at Downing LLP.
Elsewhere, Norway’s $1.2 trillion sovereign wealth fund says it will require the companies it invests in to reach net-zero emissions by 2050 at the latest.
Currently, only 10% of the stocks in the wealth fund’s portfolio have a net-zero target for 2050.
“We also believe that companies that understand the drivers of net zero emissions and anticipate regulatory developments will be well-positioned to capture the financial opportunities arising from a low-carbon economy,” said a release from Norges Bank.
Back home, our super funds control around $3 trillion combined, and are the fourth largest pool of retirement savings in the world.
But most of these super funds still invest in fossil fuels and some even invest, directly or indirectly, in weapons.
For example, Australian super fund giant UniSuper’s fossil fuel investments have increased higher even as the fund faces pressure to divest from the industry.
The $108 billion fund’s latest climate risk report showed that 2.8% of its investments were in fossil fuel industries as at June 30, up from 2.55% a year earlier.
Greenwashing also continues to be an issue in Australia.
Just a few weeks ago, corporate regulator ASIC announced that it was investigating a handful of super funds over potential greenwashing.
Martin Fahey, the CEO of Association of Superannuation Funds of Australia, gave some advice and told 7News that the best way to make sure your super funds are investing in ESG related stocks is to talk to the fund itself.
“You want to make sure your fund is invested in things that reflect what you’re concerned about from an ESG point of view, so is your fund pursuing strategies around renewables?”