The Global Retirement Reality Report from State Street Global Advisors found that 61 per cent of Australian fund member believed it was important that their investments incorporated companies with ethical values.
This is an increase from last year when 47 per cent said it was important to incorporate ESG in their plan’s investments.
State Street noted that firms that adhere to environmental efficiency, social awareness and the highest governance standards are well positioned to withstand emerging risks and capitalise on new opportunities.
Further, it believed that, as battles for employer default fund status are waged over the coming years, funds with a clear ESG proposition for both employers and prospective members will start with an advantage over their competitors.
“For some industry participants, ESG considerations are at best a distraction, and at worst a detractor to returns,” the report said.
“Sometimes the industry misses the wood for the trees. A more pointed question is to ask whether the industry can continue to operate with absolutely no regard for the environmental or social consequences of its investment decisions, or whether the industry bears no responsibility for the governance of the companies it selects for portfolios.”
State Street commissioned YouGov to conduct interviews across five countries – Australia, Ireland, the Netherlands, the UK and the US – representing a range of retirement systems for the report. It interviewed 195 defined contribution plan sponsors, which included 41 from Australia.
