Australian super funds steer Australia on decarbonisation

Australian superannuation funds' track record on environmental, social and governance issues drew the attention of global research house Cerulli Associates, which highlighted the industry's trailblazing path in responsible investing in their first The Cerulli Edge - Asia Pacific Edition report for the year.

Noting Australia's "checkered reputation" on climate change at the government level, the report said the picture was "strikingly different" at the institutional fund level.

"Superannuation funds in particular, a powerful constituency in Australia with A$3.3 trillion (US$2.4 trillion) under management, have pushed for stronger ESG behaviour among investees, which has had a galvanizing effect across the entire Australian corporate landscape. This has been the defining theme of 2021," the report said.

Superannuation funds told Cerulli that their efforts to adopt more ESG practices are driven by their members, with a far larger proportion of members driving change across a range of ESG practices than even four years ago.

More major funds are also producing reports about their commitments to become net zero carbon emissions funds. UniSuper, Cbus and HESTA were some of the first funds to publicise their journey to net zero, with AwareSuper, AustralianSuper and State Super announcing commitments last year.

"Whatever you read about the government position on climate in Australia, the presence of the fund management industry on a decarbonisation course makes it self-fulfilling. That is the power of institutional money, and everyone who serves these funds will need to be on board," the report said.

The development of emerging themes - like ESG - across all of Asia also indicates a positive outlook for Asia's mutual fund industry, according to Cerulli Associates managing director, Asia, Ken Yap.