Local Government Super (LGS) was once again recognised for sustainable investment when it took home the Best Green Super Fund for 2013 at this year’s Money Magazine ‘Best of the Best’ awards.
In recent years, LGS has been acknowledged in a number of key arenas for its holistic approach to sustainable investment, one that is considered market-leading. It sees around half – or $3.3 billion – of the Fund’s total assets in responsible investment strategies across Australian and international equities, property, absolute return and private equity classes and, more recently, sovereign bonds. This investment is far the largest commitment of any Australian super fund in sustainable investment.
According to LGS CEO, Peter Lambert, having a strong sustainability strategy is core to the Fund’s main aim of achieving strong, long-term investment returns for members.
“The bottom line is that we believe that sustainability must be a key consideration in any investment approach that aims to deliver returns to investors over timeframes that can be in the order of 40 years or more,” he said. “The reality is that a failure to effectively address social, environmental and related risks in business and investing is increasingly likely to result in a serious downside for all concerned – and that includes our members.”
Mr Lambert went on to point out that LGS’s approach differs from those of many other socially responsible or ‘ethical’ funds precisely because it is holistic.
“While we naturally support any efforts to bring social responsibility considerations into the portfolio, we often see organisations addressing only certain asset classes. At LGS we’ve taken a more diversified and robust path, by selecting sustainable options across the entire portfolio.”
In 2012, this holistic approach was expanded to include the LGS global government bond strategy, by way of a $170 million diversified portfolio with an explicit focus on environmental, social and governance (ESG) risks.
Other 2012 ESG activity which contributed to receipt of this latest Award includes:
- Specific allocation of up to 15% of the portfolio in primarily ‘AAA’ rated ‘green’ or ‘climate’ bonds issued by agencies such as the World Bank, European Investment Bank or Asian Development Bank
- Introduction of Sustainable Australian Shares as one of the Fund’s new single sector investment options
- Continued activism in proxy voting on behalf of shareholders with a specific focus on monitoring and curbing excessive executive remuneration and establishing strong independent boards to protect shareholder value.
The flagship LGS ‘green’ direct property portfolio also continues as a prime example of its ESG commitment, comprising a range of independently accredited low-emission and ‘green’ starred buildings.
“We’re very happy to be recognised for this Award and hope that we can continue to lead the way by demonstrating that, in a rapidly changing environment, sustainability is the constant that can and does deliver the security and long term returns that we’re committed to delivering for our members,” said Mr Lambert.