“A lot of our clients are relatively mature, and this can come across as a radical change to some of them. And so, our sustainability narrative is that this is as much as about economic sustainability as saving the planet.” David Graham
In addition to the strong demand for growth seen in recent years, it should be remembered that powerful supply drivers are at work too, some of which are underpinned by regulatory intervention.
APRA, for example, has highlighted the financial nature of climate change risks and strengthened its monitoring of climate change risk disclosures. Amongst the specific initiatives they have announced21 is their intention to update Prudential Practice Guide SPG530, designed to assist superannuation entities formulate and implement investment strategies which are inclusive of ESG factors. Consultation on this update will conclude during 2022.
Other notable recent developments include the updated Hutley Opinion on fiduciary duty, which suggests that Superannuation funds must divest from assets with a high degree of climate risk or face breaching their members’ best interests’ duties, and a surge in the number of asset owners and investment managers publicly making net-zero commitments22.
These supply side factors will undoubtedly increase community awareness of ESG issues and be matched by a proliferation of new choices for investors seeking to invest responsibly.
Consultation on Prudential Standard SPS 530 Investment Governance in Superannuation, apra.gov.au
Super trustees must diversify climate risk or divest: Noel Hutley, Australian Financial Review, April 2021.
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