Tim Costello has called for superannuation funds to follow France’s lead in socially responsible investing with a ‘solidarity fund’, in his opening speech at the SMSF Association National Conference.
Costello told the conference that socially responsible investing has become an important principle guiding the investment strategies of various funds because it’s good business.
Reverend Tim Costello AO, formerly Chief Executive of World Vision Australia, has been patron of the SMSF Association since September 2017.
“Investing in companies or NGOs that aid humanity and have the potential to generate better risk-adjusted returns seems like a no-brainer. Increasingly, investors seem to agree,” he told the conference.
“We should be leading, we should be innovative with our super funds, we should be saying we can solve some of our social problems, and it can be a model for other governments to solve theirs.”
Costello believes that the superannuation industry should follow the example of France in offering members the option to invest in social projects, including healthcare, job creation and low-cost housing.
Since 2008 large French employers have been required to offer staff an optional économie sociale et solidaire, which allocates 5-10% of its assets to social enterprises. The remaining balance is mostly invested following SRI (Socially Responsible Investing) principles.
Costello said this ‘solidarity fund’ has directed billions of dollars to not-for-profits carrying out social impact projects.
“The French idea could easily be adapted here,” he said.
“All economic choices have impact – whether as consumers, producers, investors, innovators or whatever. And this means we all have a certain amount of power as economic actors over not just economic, but social and environmental outcomes as well.”
“In other words, when we all take steps to reduce the gap between the rich and the poor, and when we look after those who are devalued, the whole society benefits. And becomes more trusting.”
“I would encourage all super funds to move into areas of shared value such as impact investing. Be engaged in the community. Encourage clients to invest ethically.”