Green ribbon for local super fund

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Local Government Super receives high global ranking in green investment

LGS ranked second globally for its sustainable investment.

LGS ranked second globally for its sustainable investment.

Australian super fund Local Government Super (LGS) has ranked second globally for its sustainable investment practices and maintained its AAA rating, according to yesterday’s release of the results of a global survey of the world’s top-ranked green investors.

The Climate Institute’s Asset Owner’s Disclosure Project (AODP), assesses how 458 of the world’s biggest investors, including many pension funds, are managing the risks and opportunities associated with climate change.

“Investment markets are continually changing and increasingly, that change includes greater awareness of the associated environmental, social and governance (ESG) risks. LGS sees climate change as the most important ESG investment issue facing our portfolios,” said LGS said CEO Peter Lambert.

“Local Government Super is proud to be a leader in managing these risks, which we have long recognised as affecting long-term investment outcomes. Speaking for a Board whose major commitment is securing long term, sustainable returns for our members, this ranking is a badge we will wear with pride.”

Over $4.2 billion – more than half – of LGS’s total assets are invested in responsible strategies. Significantly, that includes responsible options across multiple asset classes: Australian and international shares, property, absolute return, private equity and fixed interest.

Mr Lambert went on to say that as ESG practices at various levels become more widely adopted, especially within the superannuation industry, LGS will persist in setting and adhering to the highest standards. He also stressed that it is important to recognise that this is an evolving field – not something that’s ‘set and forget’.

“We are doing all we should to secure our members’ financial futures by investing sustainably. This requires us to remain open to new innovations that continually improve ESG performance,” he said.

“Building more sustainable investment portfolios involves not only investment per se, but also a commitment to ongoing transparency about the impact of these investments and active participation as asset owners.”

Mr Lambert went on to highlight some of the areas in which LGS has amplified its ESG commitment in the past year or so:

  • Australian shares: Last year LGS launched its Sustainable Australian Shares investment option, which excludes investment in any companies that derive revenue (at any level) from activities in armaments, gambling, uranium mining/nuclear, old growth logging, tobacco, coal mining and questionable environmental, social or corporate governance practices. The SAS option returned 22.47% in the FY12/13;
  • International shares: In 2013 LGS introduced an innovative new mandate in its international share portfolio in which ESG issues are integrated into the investment process to avoid companies with high ESG risk while gaining exposure to companies with higher ESG performance;
  • LGS was the only Australian super fund to invest in the European Bank for Reconstruction and Development (EBRD) Green Bonds. The AAA-rated bonds focus on environmentally sustainable projects in the areas of as energy efficiency, clean energy, water management, waste management, sustainable living, environmental services and sustainable public transport
  • LGS was the first Australian super fund to sign the ‘Investor Statement on Bangladesh’ joining over 190 global shareholders and investors, representing more than $US1.5 trillion, in calling on brands and retailers to implement the internationally recognised core labour standard of the International Labor Organization (ILO);
  • LGS was one of two Australian super funds to sign on to the ‘Access to Nutrition Index Investor Statement’ whose 40 signatories have committed to factor food and beverage manufacturers’ nutrition practices into their responsible ownership activities and their investment analysis.

Mr Lambert concluded by saying that LGS is looking ahead to further developments in 2014.

“Members can expect more from us in the new year as we work to safeguard their investments from environmental, social and governance risks.”

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