Do you know where your superannuation is invested?
You could be supporting tobacco companies, ammunition manufacturing or coal-seam gas extraction without even knowing it.
A lot of Australians have a set-and-forget mentality with their superannuation. As you won't need it until you’re at least 65, it can be easy to turn a blind eye and not think about it. But have you ever wondered where your super fund is investing your money and if it supports your values?
Even if you have thought about it, it’s not so easy to find out. Most super funds won’t say where they are investing your money. In fact, 19 out of the top 50 funds won’t say where they invest your money at all.
In September last year, it was revealed that Australia’s 50 largest super funds manage nearly $1 trillion of undisclosed assets. Considering the super sector is worth $2.2 trillion, this is quite a large chunk.
Does anyone care where their super goes?
Australians, particularly millennials, are becoming increasingly mindful as to where their super fund is investing their money. According to research by environmental finance campaigners Market Forcers, 86% of Australians believe super funds should be more transparent around where their contributions are going.
Almost two thirds of Australians believe their super fund should be proactively reducing its exposure to fossil fuel investments, and one third would switch funds if they discovered their current super fund supported coal or coal-seam gas extraction.
Recent research by Sustainability Victoria revealed four in five Victorians are willing to take action on environmental and social issues like social change.
The rise of socially conscious investment options.
Due to increased consumer demand, more super funds and investment companies are providing socially conscious investment portfolios. Not-for-profit fund VicSuper was one of the first to offer a portfolio of this kind, launching its Equity Growth Sustainability Portfolio in 2001. Just last month, it has evolved the portfolio into the Socially Conscious Investment option, allowing members to invest in a socially responsible way.
I recently spoke with VicSuper’s manager of corporate responsibility Kirsten Simpson on the new super investment option and why more Australians should care about where their super fund is investing their money.
“Our Socially Conscious Investment option aims to help members take action on climate change, minimise social harm, and protect human rights, labour rights and the environment,” said Simpson.
“We apply these as objectives to the equities component of the investment option while the other asset classes have applied an environment, social and governance integration approach. In more simple terms, this process ensures our members can invest in alignment with their social and environmental values and not pay any extra to do it.”
Why young Australians should care about their superannuation.
Simpson said that Australian millennials are particularly concerned about sustainability issues like the environment and climate change. However, while millennials are actively making sustainable choices with the goods they purchase, for example reusable coffee cups, they tend to forget about their super.
“Australians’ awareness of their impact on the environment and community is on the rise, and VicSuper members of all ages increasingly contact us about social and environmental issues,” she said.
“Super not only works to improve our quality of life in retirement, it can also generate positive benefits along the way too if it’s invested in a socially conscious way. If we use it smartly, it can generate value for us and wider society. That’s why I can’t stress enough that super is a huge asset that young Australians can use for good.”
Simpson said it’s encouraging to see the number of members opting for the newly launched Socially Conscious Investment option growing so quickly, highlighting the demand.
Tips for young Australians who want to know more about their superannuation.
If you’re keen to learn more about where your super is invested, Simpson shared a few tips to help with this.
1. Research. “Look for tangible, measurable goals that commit to real progress on social and environmental issues. The Responsible Investment Association Australasia website is also a good benchmark,” she said.
2. Transparency. Simpson said it’s a red flag if the information on where your money is invested isn’t readily available. If you can’t find it on their website, give them a call.
3. Competitive benefits. If your fund offers a sustainable option, it’s important to check the fees. “Do you have to sacrifice returns or pay more in fees to invest in a responsible way?”