OPINION | Generating the best possible retirement outcomes drives everything superannuation funds should do for their members. This means more than just targeting strong returns year on year.
It’s about using our long-term investment capacity to deliver sustained value. For our members today, for their retirement tomorrow, and for the world their children and grandchildren will inherit.
It’s for this reason that Cbus Super became the first Australian super fund to support the development of a new Sustainable Development Investments framework (SDI framework) – an ambitious approach to responsible investing that aligns with the United Nations Sustainable Development Goals (SDGs).
The 17 SDGs, which more than 150 world leaders adopted in 2015, came into force the following year as a global action plan unrivalled in scope and ambition. They cover everything from innovation in infrastructure to sustainable cities and clean energy, to ending poverty.
While it was governments that signed up to the goals, actually achieving them is a shared responsibility for the business and finance sectors.
Pension funds are coming together globally to develop a coherent set of scalable investment opportunities that can direct long-term capital towards achieving these goals.
Leading Netherlands-based pension funds APG and PGGM – which combined have more than €650 billion ($956.2 billion) in assets under management – developed the SDI framework, and Cbus Super is delighted to have been asked to contribute to its evolution.
The SDI framework identifies 13 of the 17 SDGs where institutional investors can make a difference.
We know that our ability to deliver the best long-term outcomes for members depends on a sustainable global financial system. To this end, we have been actively considering how we can invest in a way that contributes to the SDGs – either through active ownership or the allocation of capital – while meeting our financial risk and return requirements.
Investing in the development of quality, reliable, sustainable and resilient infrastructure – and upgrading or retrofitting existing infrastructure – are ways we can contribute to the industry, innovation and infrastructure goal.
Cbus already invests over 10 per cent of the more than $40 billion in funds we manage in infrastructure such as airports, seaports, toll roads and energy infrastructure.
Our future investment strategy will focus on developing quality greenfield infrastructure in Australia, ensuring assets are sustainable through a longer-term investment lens. Through our wholly owned property arm Cbus Property, we are already a leading provider of high-quality commercial and residential developments that contribute to making cities more sustainable.
An area where we hope Cbus can make a difference is in affordable housing. A dignified retirement includes having somewhere affordable to live, so the debate about housing affordability is central to the wellbeing of Cbus members.
That is why we are actively looking for opportunities to invest in the affordable housing market. We see a role for pension funds to provide much-needed capital to help boost the supply of affordable housing.
The investments we make into the built environment directly benefit our members’ and employers’ industries. Combined, our work in this area contributes to the goals of building sustainable cities and communities, and providing decent work and economic growth.
Cbus is also committed to investing in the transition to a low-carbon economy. We will be looking at how we invest as a catalyst for change to help bring forward businesses and technologies that can help the world adapt to climate change.
We have a responsibility to help the companies we invest in make the necessary changes to be successful in a carbon-constrained world. We will continue to advocate for a just and orderly transition for the industry and its jobs so we can invest with certainty over the longer term.
The SDGs represent a clear turning point in responsible investing, and create an opportunity for super funds like Cbus to do our part while ensuring we deliver great retirement outcomes for our members.
We know there is much more to be done, and we encourage all funds to join us.
Alexandra West is the head of portfolio strategy and innovation at Cbus Super.