Call to ‘unlock super’ to solve social problems

Call to ‘unlock super’ to solve social problems

Australia’s $3.3 trillion superannuation industry is so big it will inevitably shape the economy and the more it invests for social and environmental good, the better, according to leading funds manager Richard Brandweiner.

“You have this monstrous volume of capital,” he said. “We need to unlock that capital so it can be invested in ways that actually help create a robust future for its members.

“Governments are fiscally challenged as it is and the economic impact of social and environmental problems is only increasing.”

Mr Brandweiner, who is CEO of the Pendal Group and chair of the not-for-profit Impact Investing Australia, said: “We have the fourth largest pension system in the world and regardless of how anyone wants to interpret the sole purpose test or fiduciary obligations, the way the super system invests will shape the world that we retire into.

“There is no question: it is too big in the context of our economy (for this not to happen).”

He said using superannuation money to deliver social and environmental outcomes was the “holy grail”.

“Imagine if we can do that,” he said. “The thing that got me into this 10 years ago (was that I thought) I could make a donation to the Smith Family or build houses in Ghana or I could use everything I have learnt to try change the way our financial system works.”

Mr Brandweiner called on the federal government to back the trend to impact investing by implementing recommendations made by its own task force into the sector but which it has sat on for almost a year.

The task force, headed by Michael Traill, a veteran of the social enterprise sector, submitted its report to Canberra just before Christmas last year, following more than 18 months of work. It is expected to go to Cabinet soon, but Mr Brandweiner, who had had a long career in funds management is bewildered by the delay, given the government’s enthusiasm for the idea in the 2019 budget which allocated $5 million to the inquiry.

“The truth is that this is in the government’s long-term interests because it is about leveraging private sector capital to solve problems that ultimately will hit government expenditure,” Mr Brandweiner said.

Mr Traill said the prime minister had indicated recommendations would go to Cabinet. He said there was a capacity to attract “very significant funding to transform the impact investing market, with appropriate government support”.

Impact investing is a small but growing sector accounting for about $29bn in investment in Australia last year, a 46 per cent increase on 2019.

The task force’s interim report recommended three pillars – a fund to promote innovation, a wholesaler to build scale, and a national outcomes fund to promote more outcome-based investment opportunities.

Article from The Australian, Oct 19 2021, by HELEN TRINCA, The Deal Editor and Associate Editor