Your investments can do more than simply grow your retirement fund; it can make a real difference.
The importance of responsible investing
When you’re looking at your super investments, the line at the top of the balance sheet is generally the most important – how much money the option has made.
Some of us stop reading there; content knowing that our retirement savings are on-track.At Australian Catholic Superannuation, providing our members with positive returns on investment options isn’t the end of the story.
Like you, we want our investments to support both our financial goals as well as reflect our Catholic values. We have a duty to provide our members with investment options that are both financially sound as well as socially responsible, and in line with our Catholic values.
We have adopted the United Nations Principles of Responsible Investing (UNPRI). This requires us to incorporate ESG (environmental, social, governance) issues into our investment analysis and decision making. Essentially, this means that investment managers look at how a company manages environmental and social impacts in addition to ethical factors.
There is a theory that supports investing in ESG-focused companies because they are managed in a way that does little harm and supports their staff, which means they’ll provide better returns over the long term.
How can I be socially responsible with my investments?
‘Socially Responsible’ can mean many different things; the best place to start is with a review of the areas that you believe are important to support – or avoid.
For nearly a century, investments in tobacco companies provided some of the best returns of any industry. Supporting the underlying product may have been distasteful however the positive returns fuelled many investment packages – unbeknownst to the people whose retirements were funded by big tobacco.
There are a few different ways that you can be a Socially Responsible investor. First, if you have objections to companies that create cigarettes or mine uranium, you can seek options that do not contain objectionable offerings.
You can also seek out investments in sustainable companies.
Today, we have a great deal more transparency around the contents of investment portfolios and significantly more options available to you if you’re not satisfied.
Our Socially Responsible investing option
We have offered our members a socially-responsible investment option for several years and recently partnered with Australian Ethical Investments Ltd. to improve and expand that offering.
Being socially and ethically responsible is good; doing it in a way that helps you continue to grow your retirement savings without taking on an undue amount of risk.
“Many of our members want to take a strong stance regarding responsible investing”, said Australian Catholic Superannuation CEO Greg Cantor. “We chose to appoint Australian Ethical to manage our responsible investment option as they are the clear leaders in this area, with a strong team and performance record.”
Australian Ethical Managing Director Phil Vernon said, “Australian Catholic Superannuation & Retirement Fund chose us because of our stance on no fossil fuels, their alignment with our broader values, combined with our talented investment team and consistently strong investment performance”.
How do I know if my investments are socially responsible?
Reviewing the individual investments included in a fund’s investment option is a good place to start, but you might not have the time (or inclination) to go line-by-line. In that case, you can check that your fund is a member of the Responsible Investment Association Australasia (RIAA), a body that was created in 2005 to standardise disclosure for funds.
To qualify, fund managers have to make a case to the RIAA that they have a methodology to identify and exclude investments that support unethical behaviours. That process is, in turn, independently verified before being awarded RIAA certification.