Socially Responsible investment option
Socially Responsible investment option
Super SA offers a Socially Responsible (SR) investment option that provides our members with access to a portfolio that targets investments that contribute to the betterment of society.
This includes investments such as education, healthcare, and climate change solutions while avoiding where possible investments that have the potential to cause or contribute to social harm such as tobacco, alcohol, gambling, fossil fuels, weapons, nuclear power, and adult entertainment.
Investing where it counts
The SR investment option is invested in a range of 55 - 85% growth assets such as listed equities, property, infrastructure, and private markets, with the balance in defensive assets such as cash and fixed interest.
Super SA’s SR investment option invests in line with socially responsible investment criteria established by Funds SA. This includes a combination of:
• implementing investment exclusions
• targeting socially responsible investments
• inclusion of a ‘best-in-class’ ESG approach.
The SR investment option seeks to avoid companies that have the potential to cause or contribute to social harm. It excludes certain industries or companies that engage in certain business activities from its universe of possible investments, making them uninvestable for this investment option.
Revenue and product involvement (i.e., manufacturing, supply, and distribution) thresholds apply in some cases so that companies with multiple business activities are not excluded for very low involvement. However, Funds SA maintains low revenue thresholds so these activities can generally be avoided.
Investment exclusions applied to the Australian and International Listed Equities portfolio only:
Weapons and firearms
Genetically modified organisms
Nutrition and health
View the full list of business involvement screening criteria >
Targeting socially responsible investments
In addition to avoiding companies operating in areas of negative social impact, the SR investment option is focused on investments that contribute to solving large issues such as climate change, healthcare, education, and the provision of community and social infrastructure.
Whilst Funds SA has not adopted a formal scale for measuring the social contribution of these assets, it aligns investments with generally recognised socially responsible investing and environmental, social, and governance principles determined through its membership of industry bodies including the United Nations-supported Principles for Responsible Investment (UN PRI) and other sources.
Infrastructure investments within the SR investment option are focused on assets that support key community and social needs as well as renewable energy. This includes schools, TAFE, hospitals, correctional facilities, water treatment plants, and other social infrastructure sectors as well as wind and solar farms.
Private Equity investments within the SR investment option are focused on businesses that generate a clear and measurable positive social and/or environmental impact across one or more of the following key impact themes: climate action, inclusive growth, and healthcare. This includes businesses providing healthcare for elderly and low-income populations, digital learning solutions, environmental regeneration, and mobile banking solutions in developing countries.
Inclusion of a best-in-class Environmental, Social, and Governance (ESG) approach
Selecting investment managers
The SR investment option takes a best-in-class ESG approach in the selection of its investment managers and its investments.
Funds SA identifies investment managers that have deep expertise in understanding ESG criteria and can demonstrate its application into investment decisions. Funds SA surveys the ESG practices of its Investment Managers when completing initial due diligence and every two years to ensure that ESG processes are being maintained, as well as incorporating ESG discussions into routine monitoring activities.
Equities: best-in-class ESG approach
Within the SR investment option’s equities portfolio, the best-in-class ESG approach means prioritising investment in companies that are at the top of their sector according to external ESG ratings provided by MSCI ESG Ratings LLC. The ESG ratings are on a 7-point scale from ‘AAA’ (leader) to ‘CCC’ (laggard).
In both the Australian and International equities portfolio, companies must have an ESG rating of ‘A’ or above to be eligible for investment. Two additional rules apply to the international equities portfolio:
when building the portfolio, companies with the best ESG ratings (‘AAA’ and ‘AA’) are prioritised when filling the target weights in each sector before investing in ‘A’ rated companies; and
we recognise that even leading companies can be impacted by changes in ESG expectations. At each review, companies already in the portfolio must maintain an ESG rating of ‘BB’ or above to remain in the SR investment option.
A summary of how the socially responsible investment criteria is applied to each asset class in the SR investment option:
* These assets are grouped into Diversified Strategies Growth
This information has been prepared in good faith by Funds SA. However, Funds SA does not warrant the accuracy of the information and to the extent permitted by law, disclaims responsibility for any loss or damage of any nature whatsoever which may be suffered by any person directly or indirectly through relying upon it whether that loss or damage is caused by any fault or negligence of Funds SA or otherwise. The information is not intended to constitute advice and persons should seek professional advice before relying on the information.
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