Rainmaker names ESG leader super funds

15 superannuation funds have been named ESG Leaders by Rainmaker Information.

The ESG Leader Rating is earned by Australia's best super funds that are implementing environmental, social and governance (ESG) principles to a high level, while having a track record of strong investment performance.

Australian Ethical, AustralianSuper, Aware Super, CareSuper, Cbus Super, GESB Superannuation, HESTA, Hostplus, NGS Super, Prime Super, Rest Super, Spirit Super, State Super (NSW), TelstraSuper and UniSuper were all acknowledged for their performance.

For a super fund to be considered an ESG Superannuation Leader it must satisfy a range of dimensions regarding its ESG credentials and demonstrate high levels of investment transparency for sustainability and associated principles as well as also upholding high levels of investment performance.

Rainmaker Information stipulates that the funds are rated on their governance - that the fund publicly declares its commitments to ESG principles; investment transparency - how the fund discloses what it invests in and how it engages with companies into which it invests; publication of ESG reports - that the fund reviews and discloses its environmental, climate change and social impacts; investment processes - disclosure of the practices through which it implements ESG principles regarding how it invests, and performance - that the fund achieves its investment objectives, achieves competitive investment returns all while satisfying the Sole Purpose Test as required by the Superannuation Industry (Supervision) Act.

"ESG and sustainability principles are a rapidly evolving part of Australia's superannuation landscape with ever-increasing levels of scrutiny being applied to super funds by government, regulators and their fund members," said Alex Dunnin, executive director of research and compliance at Rainmaker Information.

"Australia's super funds are among the most committed in the world to implementing environmental, sustainability and governance principles into their investment practices. But greater regulation and higher stakeholder expectations means that more is expected from Australia's super funds than ever before."

Dunnin said the latest ESG Superannuation Leadership Ratings show that many of Australia's leading super funds are embracing these challenges while also ensuring their investment portfolios perform at high levels.

"Super funds should be active investors, not activists, and with regulators stepping up their scrutiny of financial institutions and their ESG bona-fides they must also ensure they don't make exaggerated claims regarding their sustainability practices."

Rainmaker also considered funds' net zero commitments, gender diversity among its management and senior executives, investment screening and the quality of their portfolio holdings disclosures.