Investing in ESG for a sustainable future
Issues around environmental, social and governance investing are hot topics for business and corporates. As an organisation, we are tackling ESG and responsible investing head on, with two new senior leadership roles and a range of exciting initiatives that will guide our investing in a sustainable future.
In a world where geopolitical upheaval, climate change, pollution and social equity and inclusion are driving headlines and reshaping communities, companies like ours are choosing to actively pursue a considered Environmental, Social and Governance (ESG) agenda.
“We believe in driving our ESG strategy, not just because we want to have a positive impact on the planet and on communities, but also because we realise that strong ESG practices help us build a robust and strong business. It means we can be around for our clients for the next 100 to 200 years,” says Steve Black, who recently took on the role of our new Head of ESG.
Together with our new Head of Responsible Investing, James Tayler, Black is spearheading the complex task of creating a consistent, results-driven ESG framework for our newly combined organisation, which brings four leading super funds together to form Australia’s third largest super fund.
Promoting a sustainable world
As an organisation, we support the United Nations Sustainable Development Goals (SDGs), which offer a shared global blueprint for promoting peace and prosperity for people and the planet.
Black and his team are actively driving change across six of these goals – good health and wellbeing, quality education, gender equality, reduced inequalities, responsible consumption and production, and climate action.
Their first job was to bring together all the initiatives created by the three businesses acquired in the recent IOOF merger. That helped us understand where we, as an organisation, could make the most impact.
“There were 10 or so initiatives we thought we should really focus on, at least initially, to start to move the dial,” Black says.
These consolidated efforts are already bearing fruit. Ours is one of the few financial institutions in Australia to have attained Climate Active certification as a carbon neutral organisation. We’ve also committed to Net Zero by 2050 for operational emissions in support of the Paris Agreement.
Walking the walk
At the same time, we’re championing greater diversity and inclusion as well as gender equality. And though there is still more to do, our trajectory is headed in the right direction. We now have over 45 per cent female representation in senior roles, and we’ve reduced the gender pay gap to 14.3 per cent, ahead of the industry average.
We’re also putting the finishing touches on a new bespoke SRI investment option for members, due to be launched in 2023, which will give members more choice on how and where they invest for a sustainable future.
In tandem with our corporate sustainability goals, Head of Responsible Investing Tayler is helping the organisation navigate the complex world of responsible investing.
With 25 years’ experience in global equities asset management, he has been a long-time advocate of the Principles of Responsible Investing, which is a global benchmark for responsible investment, and believes the corporate pressure towards responsible investing is completely justified.
“It would be inconsistent if we didn’t reflect the values we hold at a corporate level in the way we manage our clients’ money,” he says.
Like Black, Tayler has already found we are doing a lot of great work as an organisation, and he and the investment team have been working to deliver a responsible investment framework, with relevant due diligence and the ongoing assessment of our managers.
“The good news is that almost all of the essential pieces are in place; we just have to put them together in a thoughtful and consistent manner,” he says.
Tayler is most excited about Insignia Financial’s intention to become a signatory to the Principles of Responsible Investing (PRI), alongside our recent admission to the Responsible Investment Association Australasia.
Our ambition is to ‘walk the walk’ as well as ‘talk the talk’ on responsible investing. To get there, Tayler’s team has developed a roadmap towards achieving a public PRI rating of its performance across the six principles of responsible investing.
“This will be the first independent assurance, if you like, of us as responsible investors,” he says.
Engaging in meaningful change
One of Tayler’s biggest focuses will be around the Stewardship pillar of responsible investing, which includes engaging with investee companies to bring about positive change.
“This is something we haven’t done so much of in the past, so it’s a key area to build on,” he says.
Our philosophy of engagement rather than divestment reflects contemporary thinking in responsible investment.
“Historically, responsible and ethical funds have chosen to match their or their client values by avoiding or divesting from certain sectors of the economy,” Tayler says. “But at the end of the day, there’s always the risk that you divest and sell holdings in companies to owners who care less about their environmental or social impact and that is ultimately a less responsible outcome.”
Black and Tayler strongly counter any arguments that there is a cost to responsible investment. “There’s a long-held view that there is a cost to performance, which has been propagated by those with vested interests in our industry and the economy,” says Tayler. “But if you look at academic research and literature, there are many studies that show there’s no evidence that there is any cost.”
Black agrees. “If we address the risks of ESG, it means that we’ll have a stronger return profile for investors, which means we’ll be around for our customers to deliver financial wellbeing into the future.”