AustralianSuper, the largest pension fund in Australia, is also one of the four global asset managers who launched the Sustainable Development Investments Asset Owner Platform (SDI AOP) this year. Off the back of the webinar on ‘How to Invest in the UN Sustainable Development Goals (SDGs)’ earlier this month, we put a few questions to Andrew Gray, Director of ESG & Stewardship, to learn more about the utility of standardized SDI data, his thoughts on ESG against a COVID-19 backdrop and what else he has on his plate.
Clearly, AustralianSuper has an interest in creating sustainable long-term value for its clients. But how do you actually embed ESG considerations into investment decisions?
Over the last ten years, we have transformed our investment process to an internal model, with the Fund’s in-house investment team now managing more than one-third of total assets. With this has come a corresponding increase in the Fund’s ownership responsibilities and ability to influence ESG outcomes. The ESG and Stewardship team – of which I’m a part of – works closely with the asset class teams to integrate ESG considerations across the investment process, including due diligence prior to ownership and stewardship once we own an asset. We also collaborate on a number of investor initiatives to influence the management of ESG issues, such as Climate Action 100+.
Why did AustralianSuper decide to join the SDI AOP?
We believe the SDI AOP is the first of its kind. Because asset owners are leading its development, it is purpose-built to address our unique needs. By using standard and artificial intelligence-driven data, the platform will help investors across the world identify and assess companies on their contribution to the UN Sustainable Development Goals (SDGs).
Up until now, there hasn’t been a uniform way to efficiently collate and measure the contributions investor portfolios, and their underlying companies, make to the SDGs. This platform sets a global standard on SDG contributions for all investors and brings consistency and comparability to company-level data for over 8,000 companies.
What are the key benefits of the SDI AOP data to you – and other asset owners?
As long-term investors of capital, we must understand the sustainability of the companies we are investing in based on a consistent set of ESG metrics. The SDGs highlight 17 of the world’s most urgent sustainability challenges and include almost 170 targets on issues such as climate change, water scarcity, healthcare access and social inequality.
For AustralianSuper, the SDI AOP will progress how we assess and engage with investee companies on their SDG contribution, measurement and reporting. Integrating these insights into our stewardship program will enable us to have deeper conversations with companies on ESG issues, which ultimately can lead to better transparency and outcomes for companies, investors and members.
On a broader level, the platform provides a way for us to understand the SDG impact of the portfolio, which aligns to our aim of investing for long-term economically sustainable outcomes that create long-term value for members.
How else is AustralianSuper helping to accelerate investment into SDGs?
Over the last few years, we have been collaborating on a range of initiatives to advance the adoption, integration and reporting on the UN SDGs among the investment community and investee companies, including the SDG Baseline Project led by the Monash Sustainable Development Institute. We have also participated with industry peers in collaborative initiatives like the Principles for Responsible Investment (PRI) SDGs in an active ownership working group.
And finally, how do you think the current COVID-19 crisis has changed investor views on sustainable investing?
It has actually reminded us of the interdependency between positive (ESG) outcomes and economic sustainability. The investment ecosystem envelops ESG issues such as climate change, labor rights, health, diversity, which are important drivers of investment value and sustainable economic development.
As large asset owners, we have a key role to play in supporting a sustainable economic recovery by driving better ESG outcomes which contribute to long-term value creation. The goals of the SDGs are more relevant than ever in addressing the systemic nature of ESG issues to enable better long-term financial returns.
AustralianSuper manages more than AUD 180bn (USD 129bn) in retirement savings on behalf of more than 2.2 million members. As a profit-for-member fund its sole purpose is to deliver the best retirement outcomes for members. The Fund believes sustainable economic development and growth are vital for the creation of long-term value for members and multi-generational wealth.
Watch the How to Invest in the UN Sustainable Development Goals (SDGs)’ webinar that took place on September 10.
This article may include general financial advice which doesn’t take into account your personal objectives, situation or needs. Before making a decision consider if the information is right for you and read the relevant Product Disclosure Statement, available at australiansuper.com/pds.