The ability of a mid-sized fund like the Commonwealth Super Corporation (CSC) to win a clutch of AsianInvestor 2022 Institutional Excellence Awards is testament to the continuous progress the fund has made over the years in various critical areas including investment and ESG engagement.
The Australian super fund won the best small/medium pension fund (AUM under $50 billion) award for the second time in as many years.
Even more impressive is the fund’s ability to also win four best-in-class awards in the ‘open weight division’— alternative asset investing; ESG engagement; investing progress and innovation; and for its response to the Covid-19 pandemic.
“The focus on 'bigger is better' in funds under management is not necessarily true, if you stick to your investor DNA, and understand what your competitive advantages are - there are opportunities to be excellent, and to be very competitive against much bigger funds,” Alison Tarditi, chief investment officer, CSC told AsianInvestor.
CSC has been particularly impressive on the ESG front, although the investment team is not a fan of the term 'ESG'.
“It's a bit pigeon-holing, as though environmental, social, and governance considerations are somehow disconnected from everything else - we prefer to take an integrated portfolio approach to all risks” said Tarditi.
As long-term investors, CSC recognises that the quality of a company or asset’s management team and board is reflected in their own awareness of the systems they operate in and whether they are constructive or destructive within those systems.
The super fund decided to build up its research capability after recognising an industry-wide gap in understanding and measuring the impact of ESG factors on investment portfolios in 2002.
That has helped it gain insights to support active engagement with the companies and assets it materially invests in. These insights range from becoming more aware of the need to improve governance practices, their environmental footprint and the social externalities of their operations.
The insights are also informing its investment mandates: it introduced a decarbonising international equities mandate, which reduces the portfolio’s exposure to carbon risk by about 50% versus following a more common market-capitalisation weighted index.
The fund also partners with external investment managers to build fit-for-CSC-purpose strategies.
“The most recent example of this is via our partnership with a large active manager in the US for whom we are their first Australian client to develop a proactively managed, sustainable portfolio diversified across multiple assets and strategies,” said Tarditi.
The fund also views its investments in renewables and early-stage technologies as those that have an impact in the real world beyond financial portfolios.
These investments finance activities that add to the stock of renewable assets, and don't just trade claims on existing ones. They are firm believers in enabling companies to work on discovering novel solutions to some of the broader health and other world challenges beyond finance.
For all these reasons, CSC has been recognised as a forward-thinking institution and is proof that when it comes to making an impact, size is not the only thing that counts.
To see the list of Institutional Excellence Awards 2022 winners, click here.