The 2014 SuperRatings Annual Fund Sustainability Review examined the attitudes of super funds towards sustainability and their progress in adopting more sustainable practices in terms of both their own operations and the companies they invest in on behalf of members.
The review found super funds are increasingly using a dedicated sustainability manager or committee to implement and oversee sustainable practices, with 69 per cent of respondents having this in place.
“We believe this is a good indicator of fund’s progress and commitment to sustainability, as it helps develop the framework for funds to monitor, manage and reduce their environmental risks and operational costs,” said SuperRatings.
The review also found a greater number of funds are now adopting environmental and social governance (ESG) overlays, screening out those companies that do not meet their ESG requirements.
According to the review, in the past four years there has been an 18 per cent increase in the number of funds adopting a whole-of-fund ESG approach, as opposed to just implementing it within a specific investment option.
“This has the potential to improve the absolute impact of a fund’s ESG decisions, given a majority of investments continue to be held in non-standalone sustainable options,” said SuperRatings.
The review indicated, however, that funds require further improvement in terms of transparency, with a majority of funds still not making sustainable polices in relation to investment portfolios and internal operations publicly available.
While the review also indicated there had been improvement in the sustainability of funds in the areas of energy consumption, waste disposal, carbon emissions and water usage, the quality of funds reporting still remains varied across the industry.
SuperRatings said the review recognised a “dedicated group of funds making strong progress in improving their sustainability credentials,” despite sustainability remaining “an area that often goes unrecognised by many members”.
