Should ESG be made a regulatory necessity?
The industry funds-backed Australian Council of Superannuation Investors (ACSI) has called on the major parties to commit to strengthen investment stewardship and environmental, social and governance (ESG) considerations for institutional investors.
Among the changes being sought were explicit regulatory recognition of the importance of ESG issues in investment strategies.
The organisation claimed businesses and their boards needed to rebuild trust with Australians and that this could be supported through the responsible management of assets via reform of Australia’s framework for investment stewardship.
ACSI chief executive, Louise Davidson said a stronger stewardship framework would support the quality and integrity of financial markets and contribute to sustainable, long-term value creation for beneficiaries.
Among the remedies being proposed by ACSI were a revision of the Australian Prudential Regulation Authority’s (APRA’s) investment guidance to explicitly recognise the importance of ESG issues in investment strategies.
As well, it wanted a review of the regulatory framework of stewardship to consider appropriate minimum standards of reporting, the appropriate regulatory framework and a stewardship code that applies to all institutional investors.
Davidson said Australia’s regulatory framework lagged behind other developed economies in recognising the importance of ESG factors.
“There is a significant opportunity to bring Australia up to date by clarifying that ESG risks and opportunities are financially material and should be taken into account in risk and return analyses,” she said.
Recommended for you
As ASIC chair Joe Longo pushes firms to prepare for the upcoming mandatory climate disclosure regime, what skills are necessary if firms are looking to expand their ESG teams?
First Sentier Investors has announced it will close four of its Australian investment teams amid a simplification of the business, with $14 billion expected to be returned to investors.
Over 90 finalists have been chosen to compete at the 36th annual Fund Manager of the Year Awards, to be held in Sydney on 13 June.
Clients may be asking their adviser whether there is still value in the US technology names after their rally, but Fidelity International’s Lukasz de Pourbaix believes they can still offer upside.