Rainmaker tracks gender diversity of ESG super funds

Super funds that display ESG characteristics on average have women comprising 40% of trustee positions on fund boards and 44% of executive teams, according to research from Rainmaker Information.

Rainmaker Information has published these findings in its inaugural ESG Superannuation Study. Rainmaker estimates there are 57 ESG super funds in Australia that collectively oversee $1.6 trillion being 71% of Australia's superannuation APRA-regulated market.

Rainmaker assesses the elements of being a quality ESG super fund against five dimensions - governance, or how the fund declares its commitments to ESG principles; investment transparency, or portfolio level disclosure and disclosure on engagement with invested companies; publication of ESG reports; disclosure of the investment process and how a fund implements ESG principles; and performance, or whether the fund achieves its investment objectives and satisfies the Sole Purpose Test.

Australian Ethical Investment, CBUS Super, AustralianSuper, HESTA and Aware Super have the highest scores against a range of factors including diversity, ESG reporting, portfolio holdings disclosure, the investor groups or affiliations it belongs to, the use of positive and negative screens and other factors. LGS, UniSuper, Future Super, HOSTPLUS and Mercy Super round out the top ten.

"Part of being a super fund committed to ESG principles is to have a commitment to diversity, but not just in the entities into which the fund invests but also within the super fund itself," Rainmaker said in the study. "Diversity obviously takes a multitude of forms, spanning gender diversity, cultural diversity, racial diversity and health and political diversity."

As part of this inaugural study, Rainmaker assessed the 57 super funds deemed to be ESG super funds to review their gender diversity.  The assessment found there was "zero correlation between an ESG super fund's board and executive team gender mix. That is, the gender mix of one does not indicate the likely gender mix of the other."

One quarter of ESG funds have a ratio of women trustees of 50% or more, while one-third of ESG funds have a ratio of women executive team members of 50% or more.

However, one fifth of ESG funds have a ratio of women trustees or a ratio of women executive team members of 20% or less.

On average, ESG super funds have a higher proportion of women trustees on boards than the wider superannuation sector, according to statistics from Women on Boards, an advocacy group.

As of 2020, the full superannuation sector had, on average, 37.5% women on trusteed boards, up from 29.6% in 2016.  Retail super fund boards had 38.9%, industry funds had 37.7% women on boards, public sector super funds had 43.5% women on boards and corporate super funds had 32.7% women on boards.

HESTA, one of the top performing ESG funds according to Rainmaker's methodology, currently has nine women out of a total of 14 directors on its board, including Chair Nicola Roxon, and half of the senior executive positions are held by women, including CEO Debby Blakey and Chief Investment Officer Sonya Sawtell-Rickson.

"It's important as an organisation we live the change we want to see," said Mary Delahunty, head of impact at HESTA. "We're committed to improving diversity, and to maintaining our gender diversity and look to amplify the positive impact we can have for members - 80% of whom are women - through setting an example as an employer. Currently, 53% of our employees identify as women.

"HESTA has policies and procedures in place that ensure that employment practices are free from discrimination and that a workplace culture of diversity, inclusion and safety is fostered and maintained."

HESTA is the leader of 40:40 Vision an initiative that is aiming to ensure diversity in executive leadership in ASX 200 companies. The goal is to have a mix whereby executive leadership comprises 40% women, 40% men and 20% any gender.

Aware Super is one of the supporting partners of 40:40 Vision, as is Chief Executive Women, the Australian Council of Superannuation Investors (ACSI), Workplace Gender Equality Agency (WGEA), and the 30% Club.

"We also recognise that women can have a different work pattern than men, especially as they often take time out of the workforce to care for others," Delahunty said. "We know this can come with an unfair financial penalty so for our employees we pay superannuation on parental leave up to 12 months. To combat gender stereotypes we offer gender blind parental leave and encourage all parents to take this up.

"We have influence as investors, influence as an employer and also influence as a procurer of services.  We know that investment service providers are a traditionally male domain and we want to make sure that our investment managers understand the value of diversity so we survey our Australian and international investment managers to encourage diversity across our entire investment value chain."

Read more: HESTAgender diversityRainmaker Information40:40 VisionAware SuperMary Delahunty