HOW CAN WE USE YOUR MONEY TO IMPROVE THE PLANET?
While all investments have risks, Good Super aims to invest your money for financial return and social impact. Good Super believes that companies with good corporate behaviour carry lower long-term risks and hence provide better long term returns. With this approach, Good Super believes that it should outperform the market and deliver returns for its members over the long term.
Imagine if your superannuation could do social good and provide financial return to you on retirement!
Why Super money?
Social and environmental change is measured in decades. Driving such change takes a socially responsible agenda (motive), access to capital (means) and a long-term scope (opportunity). Superannuation fits the bill and is in a unique position as a long-term “patient capital” investor to encourage better corporate behaviour and ultimately deliver better long term returns.
|Government||Governments lack opportunity to deal with grand challenges because they are limited by election cycles.|
|Private Enterprise||Private enterprise is typically motivated by short-term profits to attract and justify conventional shareholder investment.||Private Enterprise are limited by fiscal quarters and short-term returns.|
|NGO||NGOs are limited by a lack of funding.|
With total superannuation industry assets worth $2.0 trillion (as at 30 June 2015), we believe the industry is uniquely positioned to drive this change. Good Super believes that the mature and highly-developed superannuation system is capable of supporting social impact investing principles at super scale, unlike any other system on earth.
Good Super aims to use the power of its members’ capital, and capitalise on the unique position of the superannuation system to drive change in corporate behaviour, and ultimately deliver long-term returns for its members.
HOW CAN GOOD CORPORATE BEHAVIOUR PROVIDE BETTER RETURNS? ISN’T IT ALL ABOUT PROFIT?
While many companies have “Corporate Social Responsibility” (CSR) programs, some leading companies have moved beyond CSR to embracing a concept, called “Creating Shared Value” (CSV) (for a detailed explanation of “Creating Shared Value”, see article on Harvard Business Review here). Leading companies do this not because they have taken a ‘be nice’ pill, but because they believe “Creating Shared Value” is integral to a company’s profitability and competitive position, and helps them prosper over the long term.
What is “Creating Shared Value”?
Creating Shared Value starts with the understanding that to generate long-term returns, and for companies to prosper over the long term, the communities that it affects must also prosper. It explains that through actions that substantially address social and/or environmental challenges, companies can create competitive advantage, which in turn, will deliver better returns for shareholders.
There are numerous ways in which addressing societal concerns can yield competitive advantage to a firm. For example, let’s take a resource sector company which is looking to develop a new asset, say a copper mine in a remote region. Consider what happens, if the company invests in the community and genuinely involves itself in issues of concerns (such as hospitals, schools, community development, etc.) in the remote region: the community clearly benefits from the investment, and the company also creates an enduring competitive advantage, for example, due to improvements in living conditions for its staff, more local employment and lower costs of travel in and out of the mine, which may ultimately lead to improvements in productivity and profitability.
WHAT DOES THIS MEAN FOR YOUR MONEY?
When valuing assets for prospective investment, are investors in the market properly measuring the competitive advantages and risk reductions created through shared value?
If a company has a good community relationship that is not being valued properly, then the value of the company assets will be underestimated, and a good investment opportunity may be missed. On the other hand, if a poor community relationship is not being measured, then the value of the asset may be artificially inflated, and an investor may be buying into a dud. When looked at this way, good corporate behaviours through creating shared value, are not just “green-washing”, they are value creating in the long-term. Corporate Social Responsibility (CSR) programs differ from shared value as CSR often focusses on reputation, has only a limited connection to the business and can be hard to justify and maintain over the long run.
Good Super believes that change can happen by investing in companies that want to improve their value over the long term.
A good investor can identify the under-valued asset and then work with the company to improve community outcomes, thus lowering risk and improving social outcomes and investor value. In this way, Good Super is willing to work with corporations to identify areas where there can be improved social outcomes and financial outcomes. This is a win – win for investors through superannuation accounts and the communities the companies operate in.