Responsible, investing, environmental, social, governance, ESG, sustainable, sustainability
Published 26 February 2021
Responsible investing involves considering environmental, social and governance (ESG) factors alongside financial analysis in investments decisions.
Investors worldwide are increasingly evaluating the risks associated with ESG factors in their investment programs. Examples include rising sea levels, carbon emissions, workplace health and safety, modern slavery and social licence to operate.
This article explains how responsible investing can be incorporated into a broader investment strategy, aimed at achieving long-term sustainable growth.
ESG factors can impact the financial performance of an investment. Investors often look to place a value on ESG factors and consider them alongside traditional financial performance analysis.
Responsible investing is different from strategies such as ethical investing and sustainable investing. These strategies have moral or ethical goals, and they tend to use negative screening to avoid investments that compromise an investor’s values.
However, responsible investing assumes that ESG factors have financial relevance, so they can be evaluated. Analysis of ESG risks and returns can be incorporated into a wider decision-making process for investments.
LGIAsuper recognises the importance of responsible investing within a broader investment strategy. We consider ESG factors alongside many other financial and economic risks across all our investment options.
Our aim is to deliver long-term solid returns for our members. Incorporating ESG investing into our wider asset evaluation can help us to achieve long-term growth. This is because many ESG risks are longer-term in nature, so they are more likely to impact on assets with a long-term investment horizon – such as property and infrastructure assets.
Here are some examples of LGIAsuper’s investments showing potential for delivering long-term sustainable growth, as well as some of the related ESG considerations around these investments:
Our members have different needs and priorities. For our members that would prefer investments based primarily on socially responsible and ethical criteria, we have two Socially Responsible (SR) options: SR Balanced and SR Australian Shares.
LGIAsuper’s fund manager for Socially Responsible options is Pendal Group, which has strong capabilities and industry leadership in responsible investing.
If you would like to discuss ESG investing further, our Investments Team is here to help.
LGIAsuper members can also receive financial advice* on their investment options. Limited advice on a single topic is available at no additional cost. More comprehensive financial advice is also available, and fees vary depending on the type and complexity of advice.
Call us on 1800 444 396 if you would like to discuss your investments with us.
* LGIAsuper has engaged Industry Fund Services Limited (IFS) ABN 54 007 016 195 AFSL No 232514 to facilitate the provision of financial advice to members of LGIAsuper. LGIAsuper Financial Advisers are Authorised Representatives of IFS.
Additionally, LGIAsuper has also engaged Link Advice Pty Limited ABN 36 105 811 336, AFSL 258145 to provide LGIAsuper members with access to limited personal advice over the phone in respect to LGIAsuper products.