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Climate risk top of mind for investors: CFSGAM

Climate risk top of mind for investors: CFSGAM

Tim Stewart
— 1 minute read

Three quarters of super members would consider moving their retirement savings to low carbon or clean energy options, but a lack of information appears to be holding them back, a new survey has found.

A survey of 1,000 superannuation members by Colonial First State Global Asset Management (CFSGAM) has found that 73 per cent of respondents were concerned about climate.

The research, conducted by CFSGAM executive manager Lorna Tweedie as part of the Cambridge University Masters of Sustainability Leadership program, found that just under half (48 per cent) of members were concerned that their pension fund may be contributing to climate change through investment in fossil fuel companies.

Fifty-five per cent were concerned about the financial impact of climate change on their portfolio; and 61 per cent said they would like their fund to reduce investments in fossil fuel companies.

As many as 75 per cent of investors said they could consider moving all or part of their pension to low carbon or clean energy fund.

"The most interesting component of the findings however, relate to the lack of action by members in changing their investments," Ms Tweedie said.

"Although most respondents did profess to care about these issues, only 3 per cent of respondents had actually taken any action to review and move any of their funds.

"When this was explored further, the greatest barriers to action included a lack of available information on alternative options, and a lack of time to look at and compare the choices," she said.

Follow-up interviews revealed that members were "overwhelmed" by the complexity of the superannuation process, Ms Tweedie said.

"The process for switching superannuation funds seems too complex and the lack of transparency from funds seems to lead to a lack of engagement from members," she said.

"Members were frustrated with the lack of choice in environmental, social and governance (ESG) investment options and were seeking more choice and information from their fund."

Legislation that will target portfolio holdings disclosure, targeted for mid-2016, could help the problem, Ms Tweedie added.

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Climate risk top of mind for investors: CFSGAM
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