What ESG issues keep super fund leaders up at night?

Speaking at the 2023 ACSI Annual Conference, superannuation fund leaders have commended the government’s ambition for change and shared how they balance the various ESG concerns of their many members.

CareSuper chair, Linda Scott, elaborated on the particular challenge of balancing the needs of the collective with the individual member.

“If you were to ask some of our older members, they would speak about the nature of diversity as one of a question of gender and gender diversity.

"If you were to speak to some of our 18- or 19-year older members, they would speak about diversity in gender, ethnicity, sexuality, a much wider cohort that they’d like us to take action on. 

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“We need to find a way, as an organisation, to listen to all of that and take it all on board. When you’re thinking about the best interest of your members as a whole, you do miss the individual, there’s a risk of that”. 

She agreed that the Albanese government’s focus and action on sustainability and ESG, which extended to the super industry, was moving at a quick pace.

“I think it is happening at a pace that is fair, given the time that the current federal government has been elected, and I share their ambitious need for change,” she said.

In December, the government released a consultation paper on the development of an Australian climate risk disclosure framework.

There was also work being done towards a sustainable finance taxonomy, which Minister for Financial Services Stephen Jones believed was “critical” in aligning Australia with global standards.

Additionally, Jones expected to release a draft of the government’s sustainable finance strategy for consultation in the second half of 2023.

While the super fund leaders agreed such developments were necessary towards addressing issues like greenwashing, Liza McDonald, head of responsible investment at Aware Super, noted that addressing deception in the industry was not a new concept. 

“Misleading or deceptive conduct in terms of our products and services, that’s not new, so that has been a requirement for a long time for us to think about,” she said.

“The term greenwashing has come up more recently because of the energy transition and how the industry is trying to carbonise. But going back to ensure our communications are signed by the legal time, ensuring they go through rigorous compliance and risk assessment, and like [Minister Jones] said earlier – all this shouldn’t come from the marketing department."

She suggested funds review their disclosure materials from the lens of risk and compliance, and encouraged seeking certification from bodies like the Responsible Investment Association for additional assurance. 

For Kristian Fok, acting chief executive and chief investment officer at Cbus Super, the lingering ESG lens compelled funds to look into previously unconsidered areas like modern slavery and security.

If funds were not on top of such concerns for their members, he warned, they would risk losing trust and touch with the wide cohort.

“There’s a baseline of things we need to be doing [as super funds] and that baseline is increasing,” he said. 

When asked to describe the upcoming year for industry, Fok saw 2023 as a year of adolescence.