Responsible Investing In a Peer Sensitive World
Increasing the engagement of superannuation fund members is a noble aim with many interesting consequences. One consequence is that members start thinking about how the use of superannuation capital aligns with the member’s own values. The response of many funds is to offer members investment solutions aimed specifically at promoting environmental, social and/or governance (ESG) objectives—what we call responsible investing.
Of course, member demand is not the only reason a superannuation fund may choose to adopt a responsible investing solution. There are several other valid reasons including fund trustees’ beliefs that responsible investing can add to returns or reduce risks over the long term or that as a fiduciary, responsible investing is the legally or morally right thing for the fund to do.1 Finally, it could be the fund’s desire to pay back the Federal Government, which underwrites the superannuation system with mandated contributions and substantial tax concessions, a kind of “social dividend”.
1 “Fiduciary Duty in the 21st Century”, published by the United Nations Environment Programme Finance Initiative and The Generation Foundation in 2015, concludes that responsible investing is an obligatory part of superannuation trustees’ fiduciary duty to members (see www.unpri.org).