Best Green Super Funds

Investing is not just about the returns – an ethical approach pays off in other ways

This year’s winner, Local

Government Super, is highly committed to managing environmental, sustainable and governance (ESG) risks, believing it is in the best interest of fund members and their returns.

What sets LGS apart from other super funds is that its entire $10.3 billion in assets is invested along ESG lines, using measures such as negative screening of companies involved in tobacco, gambling, armaments, old-growth forests and high carbon-sensitive sectors such as coal mining. For example, LGS’s international equities have screened out 225 companies (equating to 10%) of the MSCI All Country World Index, a strategy that has delivered 0.07% annual outperformance over the past three years. It has dropped 13 companies, or 3.5% of the ASX 200 index, including eight gambling businesses.

LGS has placed $950 million in companies with positive social and environmental benefits such as renewable energy, clean technology, recycling, energy efficiency and sustainable agriculture. It takes its governance responsibility seriously, voting on every listed company it owns. In 2016 it cast 8028 votes at 632 meetings, of which 1097 were against the company’s resolutions.

“We recognise that the prosperity of the economy and the wellbeing of our members depend on a healthy environment, social cohesion and good governance of the companies in which we invest,” says Bill Hartnett, head of sustainability at LGS.