Super’s proven ‘green’ effect

It’s been evident for a while that products invested according to environmental, socially responsible and governance (ESG) principles can achieve returns as strong and reliable as other investments. Now Covid-19 shows us how they can perform in a crisis.

Research from Rainmaker, which publishes Money, shows, in general terms, that the MySuper index is ahead of the ESG index. However, if we look separately at balanced and growth investment choices, and equities choices, a different picture emerges.

If a super fund member invested in ESG balanced or growth options they would have been 1.5% better off over the 12 months to March 31. Over the quarter they would have been 1% better off.

This effect also happened in equities investment choices. The SelectingSuper ESG Equities Index, which combined domestic and global equities investment choices, delivered 0.8% more than the equivalent non-ESG index over 12-months. The equities ESG effect over the quarter was 1.1%.

Reinforcing this, four of the top five personal balanced options and retirement balanced options were ESG options. ESG funds leading the way in the March results were Australian Ethical, Future Super, Australian Catholic Super, AMP and UniSuper.

Alex Dunnin, director of research, Rainmaker