Hostplus is changing its sustainable investment option on the back of growing demand from members who want a more sustainable and principled approach to their investments.
The Socially Responsible Investment Balanced option (SRI) now excludes a broader range of industries.
From February 15, the option excludes companies that own reserves, explore, mine, extract, produce, refine or generate energy from fossil fuels.
It also excludes companies that breach human and labour rights; manufacture controversial weapons; operate in gambling; conduct live animal exports; produce tobacco; use uncertified palm oil; and operate for-profit detention centres. Hostplus sees the option benefiting from its investment in healthcare and medical solutions via its venture capital investments.
Instead, SRI will invest in companies that contribute to sustainable outcomes in renewable energy, green buildings, clean water, community infrastructure, green bonds and alternative foods.
SRI launched in 2017, implementing an investment strategy that aligns to the UN Sustainable Development Goals. The option was previously managed by AMP Capital, but since the refresh Hostplus has awarded the mandate to other external investment managers, a spokesperson confirmed.
SRI allocates to local and international listed equities, and unlisted assets such as property, bonds, cash, and private equity. It targets a return of 3.5% per annum above inflation.
The $55 billion super fund announced it was actively considering a net-zero emissions target as part of reviewing its approach to climate-related risk management at its December 2020 annual members' meeting.
The following month, Market Forces put pressure on Hostplus to join a growing list of funds to divest fossil fuels and develop a climate action plan.
Hostplus chief executive David Elia commented: "We recognise climate change as being a material financial risk, as well as an environmental and community one. We found through our discussions with members that there is increasing community awareness and sentiment on the issue of climate change and a sustainable and principled approached to investment. We have listened to our members and have responded."