We sit down with our Chief Investment Officer, Suzanne Branton, for a Q&A on sustainable investing.
CS: Thanks for joining us. Could you start by explaining to members what ‘sustainable investing’ means?
SB: Happy to be here. ‘Sustainable investing’ is a concept that’s changed and become more prominent over time. Put simply, it’s a broad term for investment approaches that consider environmental, social and governance (ESG) factors. In recent years, especially as younger generations have become more interested in issues affecting future generations (like climate change), the approaches or ways of investing sustainably have broadened to encompass strategies that can be used in isolation or combined with ESG integration.
CS: How does CareSuper approach sustainable investment?
SB: At CareSuper, while we integrate ESG factors into our investment decisions across all investment options, however, for our Sustainable Balanced investment option we also adopt a combination of ‘negative screening’ and ‘positive thematic’ strategies. Firstly, we seek to avoid investments in areas considered harmful, such as tobacco (this applies across all our investments), child labour and controversial weapons, and reduce exposure to some activities and business practices such as companies that are involved in thermal coal production and animal cruelty.
Secondly, and most importantly, we actively seek out investments that will have a positive impact on people or the planet. For example, we might invest in companies that help reduce waste, improve energy efficiency, or address healthcare issues or financial inequality in developing countries. We’re directly contributing to positive outcomes, which is different to indirectly influencing change by avoiding investments we think will cause harm.
CS: Is it possible to invest in a ‘sustainable’ fund without compromising long-term returns?
SB: We think so, yes. Our specialist investment managers have proven they can produce very competitive long-term returns, with our Sustainable Balanced option delivering 8.24% per annum over the 10 years to 30 June 2020 (for context, the ‘sustainable fund’ median was 7.13% per annum).^
Of course, to create a meaningful positive impact, sustainable funds tend to have distinctive investments — with a lot more focus on sectors like healthcare and education and usually less exposure to companies in industries like energy production or mining. They’re likely to perform differently to the broader market, with some short-term variation, but we don’t believe they need to compromise long-term returns.
In fact, we think unsustainable practices create risks that can undermine long-term results. And with society starting to seek more sustainable choices, investing sustainably makes financial sense, which is why we apply ESG criteria across all our investments.
CS: How can members decide whether sustainable investing is right for them?
SB: As a member, when you’re thinking about your super investments, it’s important to consider what you want your money to achieve. If that’s a dual purpose (e.g. to contribute to positive change while generating returns), then the Sustainable Balanced option might be right for you. Or, you might prefer one of our 12 other investment options, all of which have different features.
CS: Where can we find out more?
For expert advice on super investments at no extra cost,* book a call-back with one of our financial planners.
^ Sustainable Fund Crediting Rate Survey 30 June 2020.
* Financial advice obtained over the phone, or through MemberOnline, is provided by Mercer Financial Advice (Australia) Pty Ltd (MFAAPL) ABN 76 153 168 293, Australian Financial Services Licence #411766.