Eco Investor October 2014

Superannuation

Fossil Fuel Free Super Fund

Future Super is a new superannuation fund that is claiming to be Australia's first fossil fuel free super fund. Along with this negative screen, it also has a positive screen, saying it aims to provide members with a strong return while funding activities that make a positive impact on the environment and community.

As well as being part of the growing movement to avoid fossil fuel investments, the Fund is helping to raise ethical investment standards, pointing out that super funds that are labeled ‘ethical' or ‘sustainable' still have investments in the fossil fuel industry.

Among Future Super's founders and backers are some well known people from the ethical investment, community activism and business sectors. And although Future Super itself has no track record, it claims to have superannuation experts and investment professionals with over 30 years of experience.

The founder and managing director is Simon Sheikh, who for five year was national director of social change organization GetUp!. Before that he worked as a financial analyst at NSW Treasury and has consulted for Bendigo Bank and the Asset Owners Disclosure Project

Adam Verwey is also a founder and executive director and has a well established commitment to ethical investment. He is a director for the Australian Centre for Corporate Responsibility, and spent nine years at Australian Ethical Investment where he was the senior relationships manager working with individuals, financial planners and employers.

Director and Investment Committee member James Thier was a founder of Australian Ethical Investment and Superannuation and was an executive director from 1991 to 2011. He is a founder and director of the ethical research organization CAER and a founder of the Responsible Investment Association.

Director and Investment Committee member Jemma Morton Green helped set up J.P. Morgan's Global Environmental and Social Risk Management office in London and is currently a Research Fellow at Curtin University Sustainability Policy Institute. She is also an adviser to Carbon Tracker, which is working to align capital markets with the climate change policy agenda.

Director and company secretary Jane Wilder is a lawyer and has been in-house counsel at major ASX listed companies and an in-house lawyer for GetUp!.

Julia Leske is an independent Investment Committee member. She is senior analyst at CAER, where she focuses on environmental, social and governance information for companies in the resource sector. She also specializes in anti-bribery, corruption and human rights.

Future Super has seed funding from Bendigo Bank, which is active in ethical investment; and is receiving investment management and administration services from financial services company Grosvenor Pirie.

The new super fund has some high profile angel investors. Simon Holmes a Court helped to build Hepburn Wind, Australia's first community owned wind farm. Jane Morton and Simon Jane are climate change campaigners through groups such as Darebin Climate Action Now, Vote Climate and Quit Coal. Caroline Le Couteur is a former Greens Member of the ACT Legislative Assembly and was a founder and former director of Australian Ethical Investment. Nicholas Dow is an IT developer and an advocate for Bicycle User Groups and bicycle law reform. Michael Cebon is the founder of EthicalJobs.com.au. Luke and Priscilla Garner are advocates for social justice and socially responsible investments.

Future Super has a balanced growth asset allocation with a broad 70/30 split between growth and income assets. The allocation for property is 5 to 15 per cent, Australian shares 35 to 70 per cent, international shares 0 to 15 per cent, interest based investments 15 to 45 per cent, and cash 5 to 20 per cent. It says the risk level is medium to high with the chance of negative annual returns 3 to less than 4 times out of 20 years.

The Fund's negative screen includes fossil fuel companies, companies that provide services or finance to significant fossil fuel projects, and harmful activities like tobacco, gambling, live animal exports, and armaments. The negative screen also excludes the big four banks; instead the Fund invests in banks and credit unions committed to being fossil fuel free.

Its positive screen aims to identify "exceptional companies whose activities are making our world a better place".

The Fund's web site has a list of its investable universe that includes 47 ASX 200 stocks, 29 mid cap stocks, 24 small cap stocks, and 20 financials, fixed interest and Government bond issuers. These include many well known property trusts and companies in financial services, healthcare, information technology, education, retail and other sectors.

Among them are the following environmentally positive stocks followed by Eco Investor: Sims Metal Management, GWA Group, Infigen Energy, Ingenia Communities, Tox Free Solutions, Meridian Energy, Dyesol, Carnegie Wave Energy, Vmoto, EcoSave Holdings, EnviroMission, Quantum Energy, and Carbon Conscious. These range from well established to speculative.

Future Super's total fees including investment and management fees are 1.9 per cent per annum plus a $94 annual member fee. The 1.9 per cent is not cheap, especially compared to an industry fund.

The Fund has insurance options for death, total and permanent disability, and income protection.

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