Oz trustees urged to consider ESG factors
AUSTRALIA - Environmental, social and governance (ESG) issues are critical to the long term financial success of superannuation assets and should be incorporated into the investment decision making process of trustees, superannuation and corporate law minister Nick Sherry has warned.
In an address to the Goldman Sachs JBWere Superannuation Forum in Melbourne yesterday, Sherry said trustees were hesitant to expressly incorporate ESG factors into investment strategies for which they had been responsible.
However, he warned the consideration of ESG factors was an important part of their fiduciary responsibilities.
He said: "Trustees of superannuation funds in Australia have solid grounds for pursuing sustainable investment strategies, provided they are precisely formulated and carefully implemented…and the purpose is the advancement of members interests.
"I must stress the integrity of decision making that is required. This is not about justifying a broad ideological agenda. Sustainable investment is a long term investment strategy that must be backed by rigor."
Sherry said, to achieve this, investment data and analytical tools needed to be available. He said one of the biggest impediments appeared to be access to adequate, verifiable information about ESG risks, and welcomed the super industry's efforts in this area to date.
He added: "It is important that the industry work collaboratively to increase the availability of quality analysis, recognising the value of this information is essential to the mainstream development of sustainable investment."
However, he warned the consideration of ESG factors was an important part of their fiduciary responsibilities.
He said: "Trustees of superannuation funds in Australia have solid grounds for pursuing sustainable investment strategies, provided they are precisely formulated and carefully implemented…and the purpose is the advancement of members interests.
"I must stress the integrity of decision making that is required. This is not about justifying a broad ideological agenda. Sustainable investment is a long term investment strategy that must be backed by rigor."
Sherry said, to achieve this, investment data and analytical tools needed to be available. He said one of the biggest impediments appeared to be access to adequate, verifiable information about ESG risks, and welcomed the super industry's efforts in this area to date.
He added: "It is important that the industry work collaboratively to increase the availability of quality analysis, recognising the value of this information is essential to the mainstream development of sustainable investment."
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