Catholic Super’s incoming head of sustainability, who has recently been hired from a global role with Mercer in London, will design and implement a whole-of-fund sustainable investment program for the $4.1 billion fund.
Danyelle Guyatt, currently the global head of research within Mercer’s responsible investment business, will be relocating from London to work at the Melbourne-based Catholic Super in September, confirmed Garrie Lette, CIO at the fund.
Guyatt was the primary researcher and project manager of Mercer’s seminal report, Climate Change Scenarios – Implications for Strategic Asset Allocation, which was published in February and asserted that climate change was a systemic risk for institutional investors with long-term objectives.
It identified the uncertainty surrounding climate policy as a major source of portfolio risk, and that investors should develop ‘early warning’ risk management systems to mitigate its impact while also building exposures to climate-sensitive assets. Under some climate change scenarios, Mercer stated, a fund targeting a 7 per cent return should allocate about 40 per cent of its capital to these assets.
In 2006, Catholic Super declared its belief that managing sustainability risks could strengthen its long-term returns by signing the United Nations Principles for Responsible Investment (UN PRI). In the years since, however, the fund had not developed a clear policy for integrating this commitment into its strategic asset allocation, Lette said.
In concert with the fund’s investment committee, Guyatt would first develop a long-term “vision” for including sustainability in its risk analyses before determining how to integrate climate-sensitive investments into the portfolio.
These bets would become part of the fund’s broad strategic asset allocation and not be confined to an investment option themed on responsible investment, he said.
“Sustainability will throw up opportunities, and if we take up opportunities in a sensible manner we will boost returns,” Lette said.
“We see this as an investment risk-return issue,” he said.