Regulator shines light on ethical super funds
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The corporate regulator is probing the practice of “greenwashing” by superannuation and managed funds that can mislead investors as to their commitment to environmental, social and corporate governance (ESG) practices.
The Australian Securities and Investments Commission (ASIC) is investigating whether the ethical investments offered by the funds are as “green,” or ESG focused, as claimed.
Credit:Karl Hilzinger
ASIC commissioner Cathie Armour says there is growing unease about the risks of “greenwashing” of financial products, partly driven by a lack of clarity about labelling of investment portfolios.
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“There’s definitely another barrier in there… there’s a barrier for them to put people in and it’s trying to work out what that barrier is because it seems to be a little complex.”
Ashton’s findings come as research from Investment Trends and State Street Global Advisors (SSGA) found that 70% of planners in Australia were using or had planned to use managed accounts, but the issue was around figuring out what was stopping advisers committing their clients to the model.
“It could be a heap of things, maybe the statement of advice (SoA) is too hard to sell to the client, it might be the cost is a little higher and they can’t get their head around how that works in best interests,” Ashton said.
1 July 2021
Advisers are not following through on maximising client funds in managed accounts, despite popularity with its initial uptake.
Angela Ashton, Evergreen Consultants founder and director, said there seemed to be a barrier stopping advisers.
“Across all platforms, they’re building managed accounts and they’re setting them up and then advisers are not using them anywhere near as much as they promised or thought they might,” Ashton said.
“There’s definitely another barrier in there… there’s a barrier for them to put people in and it’s trying to work out what that barrier is because it seems to be a little complex.”
The portfolio included funds from firms such as Janus Henderson, Australian Ethical, Pengana and State Street. Overall, there were 21 funds in the portfolio from 18 managers and this would be reviewed monthly.
Angela Ashton, chief executive of Evergreen, said: “Given the lack of a consistent framework for responsible investing and limited access to accurate data, Evergreen took on the task of developing its own index and has used it as the basis for the model.
“As investors across the board become increasingly conscious of the impact companies are having on the environment and society and take an active role in ESG considerations, we will continue to offer innovative solutions for long-term investors who care about their capital being invested wisely, as well as doing good for themselves and future generations.”