VicSuper takes the lead on low carbon superannuation
20 May 2009
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VicSuper is the first Australian super fund to direct members' retirement savings into an investment portfolio which is designed to achieve the same investment return as the broader international share market - with half the carbon footprint.
Managed by Vanguard Investments, this low carbon investment portfolio comprises 700 companies which collectively emit significantly less carbon emissions than their industry peers (see the notes section for measurement details). These companies were selected from the 1,700 company strong MSCI World ex-Australia Index, and represent the top 40% of each industry for carbon performance.
VicSuper Chief Executive, Bob Welsh, said: "The cost of environmental damage which carbon emissions cause is not yet priced into the value of financial assets such as share prices for publicly listed companies. But it's only a matter of time, and this means investors are currently presented with significant risk and opportunities. "At VicSuper, we firmly believe that low carbon investments offer less risk and the likelihood of higher long-term investment returns. Therefore, investing in a carbon aware portfolio is simply a commonsense investment decision for us.
"Our initial $150 million investment is the latest step which we've taken on VicSuper's well-established journey to incorporate sustainability considerations into all investment decisions. Not only is this the best way to safeguard and grow the retirement savings entrusted to us, but it also enables VicSuper's members to feel confident that they're investing in a better future."
The carbon aware investment portfolio is diversified across all industries; companies were selected based on research and analysis conducted by Trucost Plc, a London-based environmental research organisation which advises companies and investors on the environmental impacts of business activities.
Trucost Plc Chief Executive, Simon Thomas, said: "By including companies from all industries, rather than excluding industries which are carbon intensive such as mining and resources, the fund encourages and rewards better performance because capital is directed to companies which outperform on carbon efficiency." According to Vanguard, the portfolio is designed to be index-like by targeting a similar risk/return profile as the MSCI World ex Australia Index, while providing 50% less carbon exposure than the index (see notes for further details on the fund).
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