Treasury veteran Mike Callaghan, who led the retirement income review for former Liberal treasurer Josh Frydenberg, has also expressed wariness of encouraging super funds to invest in projects motivated by political or social benefits, while former banker David Murray has said it is “not the place of the government” to decide investments.
ASFA chief executive Martin Fahy said that super funds’ investments in renewables was “critically” part of their infrastructure holdings given the net-zero transition. They still delivered strong returns.
“The pace of transition into sustainable investments is speeding up in response to a myriad of external factors, but ultimately, these investment decisions are delivering to the best financial outcome for members,” Dr Fahy said.
Industry super funds directly investing heavily in renewable energy include Rest, which fully owns the Collgar Wind Farm in Western Australia; Aware Super; Cbus and Future Super. Other funds such as HESTA, Hostplus and Brighter Super are indirectly invested in solar and wind projects.
At the same time, funds have increased their investment in infrastructure generally from $30 billion in 2010 to $165 billion in 2022.
Just one third of funds were invested in infrastructure in 2010, representing 3 per cent of the sector’s total assets under management. That figure has increased to 8 per cent of assets under management now. Dr Fahy said holding infrastructure assets was now “the rule rather than the exception” for super funds.
It comes as funds face increased pressure over their valuation of unlisted assets such as infrastructure. The prudential regulator warned this month that it wants to lift the governance standards of superannuation funds to insist on more timely revaluations of unlisted assets to protect new members from buying in at artificially high prices.