How Verve Invests Super Ethically

Author Christina Hobbs
Posted on 17 April 2019
How Verve Invests Super Ethically

“I’m invested in what? Huh… Are you sure?”

It’s the answer I commonly receive when I break the news to women about what their superannuation is invested in.

For most of us, it’s shocking to think that Australia’s retirement savings are invested in: nuclear weapons and armaments; coal and other fossil fuels; companies known to abuse women workers in their supply chains; companies that test cosmetic products on animals; and even offshore detention centers and financing for governments that are known to be committing human rights abuses.

According to the Responsible Investment Association of Australasia (RIAA), nine in ten Australians expect their super and other investments to be invested responsibly and ethically.

The problem is, that most super funds (even some of the ethical offerings) invest in companies that generate social and environmental harm.

The super power of women to create change

Here’s a radical idea. What if Australian women of all ages, cultures, and income levels, demanded that their super be invested in a way that didn’t hurt people, the planet, or their own values?

By 2020, Australian women will hold an estimated 1.25 Trillion in superannuation. That’s an enormous amount of financial power, that if invested ethically could remarkably reshape our economy — and our planet.

How we invest our super really matters because by 2030, it’s estimated that superannuation will own half the Australian Stock Exchange. It’s up to us all to decide what that investment is financing.

Ethical investment is financially smart

There is no need to compromise ethics for returns, or returns for ethics

In Australia, the most recent research shows that ’responsible investments’ have outperformed their benchmarks over three, five and ten years, check out the graph below.

Source: Responsible Investment Association of Australia, Financial Adviser Guide to Responsible Investment, 2018.

The results in Australia aren’t unique. Global studies from Oxford University, Harvard Business School, Deutsche Asset & Wealth Management, Morgan Stanley Institute for Sustainable Investing, and the United Nations Environment Programme Finance Initiative, have demonstrated similar positive returns for ethical investments*.

Verve members are using their world changing super power

Most super funds make investment choices without considering a company’s real-world social, ethical and environmental impact. If a company is large or looks profitable, most other funds don’t care if they make money from trashing the planet and harming society.

Verve members know that when we make a financial investment, we are also making an investment in the type of future we all want.

At Verve, we are upfront about our values, and transparent about where member’s money is invested.

Our ethical investment decisions are based on research which determines what industries the majority of Australian women do and don’t want to support.

How Verve invests ethically

At Verve Super we work with our fund manager to undertake a two-step ethical screening process to ensure your money is invested in companies that can both grow your super savings and build a better world.

  1. We don’t invest in the nasties: our negative screen rules out harmful and destructive industries like fossil fuel investments, detention centres, live animal export, nuclear and armaments, tobacco, gambling and more.
  2. We seek out the future makers: our positive screen ensures we actively seek out companies that are doing social and environmental good, such as renewable energy, healthcare, education and technology.

We are 100% transparent in the companies we invest in, because we believe you should know where your money is going!  While most super funds only disclose their largest 10 investments, Verve is fully transparent. Check out the full Verve Super portfolio.

Cochlear – just one of Verve’s values aligned ethical investments.

Cochlear is a great example of a company that Verve invests in, generating a profitable investment for our members super balances and our future.

Cochlear is a company with a mission to help people hear and be heard. For over 30 years, Cochlear has delivered numerous ‘world firsts’ in hearing technology. Delivering over three decades of implant innovation to hundreds of thousands of people worldwide.

On another note, Cochlear have one of the lowest pay gaps of any ASX listed company, at 3%.

Adding a ‘gender lens’ to ethical investing

Along with our Fund Managers, Verve is the first super fund in Australia to apply a  gender lens to ethical investment across our business.

At Verve, we think about women and how women live when considering a business and its impacts.

For example, Verve doesn’t invest in companies that are known to abuse the rights of women workers in their supply chains. We also actively avoid investments in companies with no women in senior leadership, particularly at the board level.

If a company is otherwise ethical, but doesn’t have any women on its board, we will work with our fund managers to help a company change its structure. But ultimately, if no action is taken we advise our fund manager to dump the stock.

 

*For example: Friede, G., Busch, T. & Bassen, A. (2015) ESG and financial performance: aggregated evidence from more than 2000 empirical studies, Journal of Sustainable Finance & Investment, 5:4, 210-233; Bank of America Merrill Lynch, Equity Quant Research, June 2017; and Sakis, K., Pinney, C. & Serafeim. G. (Harvard Business School) ESG Integration in Investment Management: Myths and Realities, Journal of Applied Corporate Finance 28, [][no. 2 (Spring 2016): 10–16