NGS Super is committed to support sustainable investment while at the same time producing strong investment returns for its members – a goal which the fund believes is not mutually exclusive.
The Fund has a responsible investment policy to ensure that environmental, social and governance risks are assessed in order to engage with investment managers and companies to promote better environmental and governance policies.
The four hottest years on the global record were 2015, 2016, 2017 and 2018 and some of the past environmental practices used by companies are no longer acceptable. Prior to investing in certain businesses, the investment team will consider the long, medium and short-term environmental investment risks the company poses. Under the fund’s scrutiny, if the business does not meet the policy on responsible investment, there will be no investment.
Specific restrictions are placed on companies whose primary business is the production of tobacco, a restriction on investment in companies that generate more than 30% of their revenue from the distribution or extraction of thermal coal and a restriction on companies whose primary business is the manufacture of armaments.
The Fund is a signatory to the Principles for Responsible Investment and every investment decision made is filtered through these principles. A recent example is the Fund’s investment in Alliance Bernstein’s Green Alpha Fund, which has a low carbon strategy aiming to achieve attractive returns while producing a positive impact on the environment.
NGS Super CEO Laura Wright said “Our investment in Green MVE is a way for us to reduce the carbon intensity and risk of our portfolio without impacting the expected returns of our members. Overall, we believe considering the cost of carbon in the investment process helps reduce the risks associated with climate change and supports in the broader transition to a low-carbon economy”.
NGS Super exercises its voting rights and seeks to engage directly with corporate entities which the Fund is invested in or seeks to invest in. This includes an ESG-related report to ascertain how the company deals with social issues such as industrial relations and gender balance on boards and management.
In addition to the overall screening which takes place prior to investment, NGS Super has direct investments in Newpin Social Benefit Bonds, the Resolve Benefit Bond and the Newpin Social Benefit Bond Queensland. These bonds provide a competitive financial return backed by governments while supporting activities such as returning children to their parental home, improving the lives of people suffering mental health issues in NSW (Resolve Program) and working with Aboriginal and Torres Strait Islander peoples to bring children who are in out-of-home care back to their family.
Before investing in specific companies, NGS Super will consider information from companies regarding adherence to codes of conduct, community standards and ethical principles.
The Fund will join with other entities such as the following organisations: Australian Council of Superannuation Investors, Responsible Investment Association of Australia and the Investor Group on Climate Change, to ensure potential investments meet acceptable governance practices. Sound corporate governance is required prior to any investment and independent research on ESG considerations is a prerequisite.
NGS Super members also have the option to invest all or part of their super in a ‘green’ option which is named Socially Responsible Diversified.
(Important information: The information in this article is general information only and does not take into account your objectives, financial situation or needs. Before making a financial decision, please assess the appropriateness of the information to your individual circumstances, read the Product Disclosure Statement for any product you may be thinking of acquiring and consider seeking personal advice. Past performance is not a reliable indicator of future performance. Any opinions are those of the author and do not necessarily reflect the view of NGS Super.)