The award acknowledges a unique system we developed for incorporating environmental, social and governance (ESG) considerations into our investment decisions within our SIMON (Systematic Investing Multifactor Opportunities) strategy.
As one of Australia’s largest superannuation funds, we are always looking for investments that will deliver strong, sustainable, long-term returns for our members.
The ESG Incorporation Initiative of the Year award highlights our ongoing commitment to raising the standards of responsible investing, which we believe go hand-in-hand with competitive long-term returns for members.
We are the only Australian superannuation fund to win a prestigious PRI award and be recognised on a world stage for the work we do every day to deliver our members the best possible retirement savings.
What is our SIMON strategy?
SIMON helps us achieve our investment objective of sustainable, long-term returns for our members. It uses a range of systematic techniques, like valuation and earnings momentum, to screen the Australian share market for attractive stocks. While many of the screening techniques address fundamental investment considerations such as earnings, they also allow us to attribute a long-term value creation (LVC) score to our investments.
Following extensive internal research, the SIMON process incorporates the LVC score to show the links between key ESG factors - like diversity, workplace culture, corporate governance & the impact of climate change - and long-term corporate performance.
Companies that score well on ESG factors tend to have better long-term sustainable performance. Therefore, by incorporating these factors into the screens used by SIMON to evaluate the companies we invest in, we are able to achieve better outcomes for our members and their super. This is because we can better consider the long-term potential of an investment.
Our CEO, Deanne Stewart says, ‘Too often investors (like big super funds) discount the long-term return dividend of strong governance and leadership and attach greater weight to short-term returns.’
Our SIMON process gives us the ability to price-in long-term potential, which creates a more stable investment portfolio (as we buy and sell assets less frequently). This should reduce our transactional costs and deliver more sustainable returns for members over the medium to long-term.
We were named part of the PRI’s 2019 Leaders Group
First State Super was also named as part of the PRI’s 2019 Leaders’ Group, which recognises initiatives that showcase leadership and raise standards of responsible investment across the globe.
Backed by the UN, the PRI is a group of more than 2,000 signatories who oversee $80 trillion in assets and have committed to incorporating ESG factors into investment decisions.
This year’s Leaders Group focused on asset owners’ selection, appointment and monitoring of external managers in listed equity and private equity.
‘ESG issues such a diversity, workplace culture, governance and the impact of climate change can pose very real long-term risks to our investment returns, and our members’ retirement savings,’ Deanne Stewart said, ‘so it is critical that the fund managers we work with not only identify these risks but, put in place mechanisms to mitigate them.’
We were recognised in the company of 46 other global leaders in this group and it is an acknowledgement of the work we do and will continue to do, to provide our members with the best possible retirement outcomes and be a force for good in our community.