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Australians among the most active ESG investors globally

SelectingSuper Media Release - Tuesday 4 June 2019

Australian investors currently have $30 billion dollars invested in products that are specifically created as an ESG (environmental, social and governance) offering, which has grown by 37% in the 12 months to December 2018. Alongside this, balanced ESG superannuation options outperformed other balanced options in the 12 months to April 2019.

Australia currently has 141 signed and active ESG investment providers that have products aligning with the United Nations Principles for Responsible Investment (UNPRI), making Australia the fourth most active country for ESG investment awareness.

One quarter of Australia's ESG investment providers are superannuation funds and almost half of Australia's superannuation savings are overseen by funds and investment managers that follow ESG investment principles.

These insights are revealed by Rainmaker Information, which publishes the superannuation information portal SelectingSuper.com.au.

The latest analysis further indicates that ESG superannuation investment options are among some of the better performing options across one, three, five and ten years.

AustralianSuper's 'Socially Aware' option is the best option over 10 years in the balanced sector, HESTA's 'Eco-Pool' growth option is the fourth best over ten years and fifth best over five years in the growth sector, while WA Super's 'Sustainable Future' option is the sixth best balanced option. This performance is all relative to the three years to April 2019.

Table 1: Top performing ESG super fund investment options
Best performing diversified ESG option Five year return p.a. to April 2019
HESTA - Eco-Pool 10.3%
Australian Ethical Retail Superannuation Fund Employer - International shares 9.79%
UniSuper - Sustainable High Growth 9.74%
AMP SignatureSuper - Responsible Investment Leaders International Share 9.61%
Mercer Super Trust Corporate Super Division - Mercer Socially Responsible Shares 7.53%
Christian Super - Ethical High Growth 7.39%
NGS Super - Socially Responsible Diversified 7.36%
Equip MyFuture - Sustainable Responsible Investments 7.32%
WA Super - Sustainable Future 7.24%
Lutheran Super - High Growth All Australian Shares Socially Responsible Investment 7.05%
Source: Rainmaker Information

Alex Dunnin, Executive Director of Research at Rainmaker Information explains "these results show that investors give up nothing when they invest according to ESG principles, though a fund following ESG principles should never be used as an excuse for under-performance."

Supporting this is a 0.6% performance gap in favour of ESG options over the one year period to April 2019.

Table 2: Biggest Super Funds with ESG options
Biggest super funds with ESG options Total ESG FUM ($M)
UniSuper 3,875
AustralianSuper 2,348
Christian Super 1,514
VicSuper 465
Source: Rainmaker Information
"And this is the point of ESG - it's all about taking into account the long term risks which must include environmental and sustainability factors. The debate about ESG has long moved on from having to defend investing this way. In fact, it's now the other way around - how can long-run investors not take these factors into account?"

Dunnin added that "the increase in funds invested into ESG related products as well as an increase in the number of super funds following these principles across their whole portfolio highlights that following ESG principles is simply good practice. It's no coincidence that the Reserve Bank and the superannuation regulator have the same view on this."

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