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UniSuper Fund
Name
Institution Affiliation
Executive Summary
According to the Australian legislative law, under the Corporations Act 2001, all businesses are required to be responsible for the interests of stakeholders and the community. The act requires that all the businesses, including financial firms, are required to adhere to the corporate social responsibility contained under the constitution. However, the recent outburst by the public concerning the use of their money in investing in coal industries and other polluting industries sparkled debate on how superannuation funds adhere to social responsibility. With such funds showing their irresponsibility and ignorance, UniSuper is a role model for the industry as it is dedicated to being corporate citizenship. UniSuper fund demonstrates its corporate citizenship through investing in eco-friendly sectors and having strategies aligned with its corporate social responsibility policies. Such actions by UniSuper is worth coping and is an example to other funds to demonstrate their corporate citizenship.
Table of Contents
TOC o “1-3” h z u 1.Introduction PAGEREF _Toc38628611 h 32.Background PAGEREF _Toc38628612 h 43.Methodology PAGEREF _Toc38628613 h 44.Findings PAGEREF _Toc38628614 h 54.1 UniSuper PAGEREF _Toc38628615 h 54.2 Corporate Social Responsibility PAGEREF _Toc38628616 h 74.3 UniSuper’s Corporate Social Responsibility PAGEREF _Toc38628617 h 84.4 UniSuper’s narrow view of CSR PAGEREF _Toc38628618 h 94.5 UniSuper’s Broad view of CSR PAGEREF _Toc38628619 h 95.Discussion PAGEREF _Toc38628620 h 106.Conclusion PAGEREF _Toc38628621 h 117.Recommendation PAGEREF _Toc38628622 h 11
IntroductionFor the past two decades, corporate social responsibility (CSR) has been and is still a subject of discourse in the global business environment. The majority of businesses across the world in the present day have existing strategies targeting corporate social responsibility. According to Anderson and Landau (2006), more than 70% of the leading corporations in Australia have CSR policies affirming how businesses are responding to the issue. Currently, businesses are focused on having CSR policies having witnessed their incredible benefits in brand recognition and societal progression. However, a study conducted by Elizabeth and Robinson (2018) revealed that the concept of CSR is complex and multi-dimensional.
In the Australian superannuation industry, significant investments exist in coal production as well as other polluting industries. The massive investments made in the companies has been triggered by the enormous profits generated by the industries which constantly pollute the environment. Recently, the coal industry was in the spotlight for its support and considerable investments in polluting industries. In response, the funds disclosed that their aim was to profoundly guarantee the best possible return on fund member investments regardless of the industry worthiness. The sentiments sparkled debates about CSR issues in the superannuation industry. Thus, the UniSuper investment company is an excellent investment solution, having its CSR policies that direct investments in eco-friendly, socially responsible industries. UniSuper plays a vital role in the Australian superannuation industry for its provision of alternative investments integrated with numerous CSR policies.
BackgroundRecently in Australia, the public came blazing at 22 companies for defying the call for climate action. The public took their uproar to social media and the streets, demonstrating their disappointment at the businesses, inclusive of financial corporations. The financial companies included Australian superannuation funds, which used the retirement savings of employees to invest in coal production and other industries associated with environmental pollution. The production of energy from coal is a significant contributor to environmental pollution that prompted the signing of the Paris Pact by different governments and stakeholders across the world (Gencsu, I. et al., 2019, p. 11). The agreement targets the mitigation of environmental pollution through the reduction of coal production. Among the details highlighted in the agreement is government funding in eco-friendly means of energy production. Therefore, the superannuation funds’ actions to invest in coal and other polluting industries contradicts with the Paris Agreement.
The outburst of the public sparkled debates on how the superannuation funds are using their retirement savings. Furthermore, the issue contributed to studies on the extent to which the companies’ strategies align with the corporate social responsibility and the Paris Agreement. According to research by Market Forces, the majority of Australian companies do not have their goals aligned with the Paris Agreement (Market Forces, 2020, p. 2). The findings reveal that much ought to be done for companies to adhere to the call for climate action. With the public concerned with how their saving is being used, UniSuper is having the keys to eco-friendly investments.
MethodologyThe research used quantitative and qualitative methods of research. To find out more information on UniSUper and its importance in the Australian superannuation industry, the research employed the use of internet sources and previous researches conducted on the industry. The research focused on the information available on UniSuper’s website. With technological advancement, websites are proving to be beneficial and resourceful in the access of critical information regarding the company. The information is reliable as the fund keeps updating their website with the latest information about the fund. Therefore, the information about the fund’s operations, management, and corporate social responsibility is obtained from the fund’s website. Previous research about the Superannuation industry and corporate social responsibility in Australia was correspondingly used. Previous studies on the subject equally helped to investigate the importance of UniSuper in the Australian superannuation industry alongside the corporate social responsibility trends in the industry.
Nonetheless, since the research is founded on the existing case studies and research, there might be a challenge because only a limited number of studies are centered on superannuation funds and its corporate social responsibility. The few studies linked to superannuation’s corporate social responsibility are seemingly an obstacle to acquiring more information on the subject hence a primary challenge.
Findings4.1 UniSuperUniSuper is a superannuation fund in Australia targetting employees of higher learning and the research sectors. As outlined in UniSuper’s website, the fund is devoted to providing superior retirement outcomes to various categories of employees (UniSuper, 2020). UniSuper is committed to rendering the best services to employees, whether they have recently been employed or when they have changed employers. The fund, which has more than 400,000 registered members, recorded a 7% increase in membership in 2019. The fund currently has more than $85 billion in assets (UniSuper, 2020). Consequential to the Australian government’s directive that all employees ought to have superannuation, UniSuper is among several super funds in Australia and also among the largest. However, unlike other super funds, UniSuper targets Australian higher education and sectors.
UniSuper, just comparable to other funds, operates through contributions from members which they will obtain upon retirement. The fund protects the members’ funds and boosts them through investments. According to the Superannuation Guarantee (SG) legislation, the members’ employers ought to contribute up to 9.5% of the total earnings (UniSuper, 2020). Afterwards, the money is managed by UniSuper, which is then returned along with the returns made to the employees upon retirement. The final balance upon retirement is dependent on the amount of contributions made, investment returns, and additional fees paid. In summary, the fund works by investing members’ contributions and repaying them back with the profits generated.
Conversely, the fund allows one to choose where their contribution will be invested in. There are several investment options that members can choose from, with the default investment option being the Balanced option or MySuper (UniSuper, 2020). Furthermore, the fund has insurance policies such as disability cover, death cover, and income protection cover. The fund offers the insurance covers by acquiring the covers from an insurance company. The obtaining of an insurance cover via the UniSuper fund is, however, affordable compared to acquiring a separate individual policy. Distinct from other superannuation funds, UniSuper is a profit-for-members fund, implying that all profits are directed to the members. Consequently, there are several benefits associated with being a member at UniSuper.
In terms of the administration, the fund is owned by the 37 Australian universities and is managed by UniSuper Limited, a corporate Trustee. The fund believes that to realize an effective superannuation system, there ought to be good governance in the management of funds. Thus, the fund is managed by a board comprising of 3 directors, four representative directors from the universities, and four representatives (UniSuper, 2014, p. 3). The management is aimed at protecting the interests of its members. Alongside the board is the Consultative Committee that plays a crucial role in the governance of the fund while also taking part in the decision-making process (UniSuper, 2014, p. 4). Therefore, the structure of the fund’s management is aimed at achieving the best control of the superannuation of the employees of higher education and the research sector.
Being a profit-for-members fund, the fund is of significance hence a role model to other funds. The mainstream superannuation funds are focused on generating high returns from which the gains only benefit other involved parties ahead of the investor. An excellent example is the funds investing in coal production and other polluting industries. Such investments led to criticism and public outburst as to how their investments are being misused. However, UniSuper is an excellent example of a fund that exhibits its corporate citizenship to the community. According to the fund’s website, the fund has its strategies aligned with its corporate social, economic responsibility (UniSuper, 2020). UniSuper is, for that reason, a role model to other funds as it is a responsible investor.
4.2 Corporate Social ResponsibilityBusinesses today, including financial firms, are aligning their strategies with corporate social responsibility. Corporate Social Responsibility is a model that guides businesses to be socially accountable and be responsible for the environment. Another acceptable definition of CSR is the lengths beyond just the legal business requirements to the broader perspective of responsibility towards the community and environment (Anderson, H. and Landau, I., 2006, p. 4). Over the years, the business world has evolved with more emphasis directed towards CSR policies. In Australia, the majority of companies have their activities and strategies that purport to reflect their dedication to being responsible to society and the environment. Through businesses’ policies aligned with CSR, these firms display their corporate citizenship.
There are various legislative laws aimed at regulating CSR in Australia. The regulation stipulates the responsibility of business management in recognizing the interests of stakeholders. Additionally, the statute permits firms to voluntarily participate in numerous social and environmental initiatives (Anderson, H. and Landau, I., 2006, p. 8). In Australia, the regulation laws are contained in the Corporations Act 2001 (Anderson, H. and Landau, I., 2006, p. 8). Furthermore, the legislative law also entails obligations on superannuation, which is contained in section 1013D (1) of the Corporations Act. The sections unveil the extent to which superannuation funds can be responsible to the society, environment, and ethical standards during investments. Moreover, there exists another section, Section 299(1)(f), containing the requirement that financial firms ought to attach information of breaches of environmental regulations. Therefore, there are questions of the extent to which the government ensures corporate citizenship since some superannuation funds are breaching the act and investing in polluting industries.
4.3 UniSuper’s Corporate Social ResponsibilityUnlike other superannuation funds, UniSuper is aware of its broader responsibility to the environment and the community. The fund has its corporate social responsibility that aims to align with its investments. Being an investor, the fund first examines the environmental, social, and governance issues before making investments. Through such responsible investments, the fund, therefore, aligns its investments with its corporate social responsibility policies. In the recent past, there has been an intensification of the environment, social, and corporate governance (ESG) within the fund. Climate is another issue that the fund is keen on, having its portfolio aligned with issues surrounding climate action.
4.4 UniSuper’s narrow view of CSRThe narrow view of CSR is the corporate responsibility of a company by making contributions to society. Under the narrow view, companies can show their corporate responsibility by using their profits to support employment, wages, and investments. Therefore, the social responsibility of a firm is to grow its earnings provided that it remains responsive to the community and environment. Through generating profits, companies like UniSuper can show their corporate citizenship through improving society.
In UniSuper, the narrow view of CSR involves investment activities that would, in return, generate profits from their members’ contributions. The fund invests in various mix of assets from where the member chooses where their contributions would be directed to. Among the options offered by the fund are the pre-mixed options and sector options. Under the pre-mixed options, the fund chooses and manages the investments on the members’ behalf. The options under pre-mixed include conservative, balanced, and growth. On the sector options, the investments are rather diversified in different variants. The options that members’ investments are spread includes Australian bond, Australian shares, global companies in Asia, and international shares (UniSuper, 2020). Therefore, UniSuper displays its narrow view of social responsibility through investing members’ contributions in diverse sectors to generate profits for the members.
4.5 UniSuper’s Broad view of CSRThe broader view of CSR is the action by corporations that display their accountability in caring for the environment. Furthermore, the more comprehensive view of CSR entails a firm’s efforts to show support for the improvement of the neighboring society. Through such measures, a company can have the opportunity to create a positive image for its members and community.
UniSuper shows their corporate responsibility for the broader view of CSR through directing their investments in ecofriendly industries. Before investments, the fund first considers several issues, including climate risk management, human rights, and the ESG disclosure and transparency of the sector (UniSuper, 2020). Moreover, the fund assesses the management’s ESG capabilities before agreeing to invest. Notably, the fund reviews the industry’s ESG approaches, ensuring that its investments uphold high standards.
DiscussionFrom the findings, superannuation funds, identical to other financial firms, ought to display their corporate citizenship as per the Corporations Act of 2001. With superannuation being compulsory in Australia, the government must ensure that the funds comply with the Corporations Act. The funds ought to show that their corporate citizenship through various policies that align with the CSR. UniSuper is an excellent example of a fund that has its strategies aligned with the CSR. UniSuper is a superannuation fund that offers retirement benefits to employees of higher learning and research sectors. UniSuper plays a vital role in the superannuation industry as being the role model of how corporate citizenship is aligned with investments.
From previous studies and research, CSR is an evolving concept, gaining attention in the business environment. In Australia, the government, under the Corporations Act, requires financial corporations to be responsible corporates to both society and the environment. UniSuper, being among the financial corporations mentioned in the act, aligns its strategies with the CSR policies. UniSuper is a responsible investor through its measures of first assessing environmental, social, and governance factors before making its investments. The fund has both a narrow view and a broader view of CSR. The fund generates revenue by investing in ecofriendly sectors.
ConclusionConclusively, UniSuper is a corporate citizen as it possesses CSR policies that guide the fund to make sustainable and socially responsible investments. Through its wide variety of investment options, members can choose how their contributions can be invested in sustainable industries while essentially creating returns. UniSuper is among other financial firms that are aware of their corporate citizenship to the community and the environment. Therefore, with the criticism of superannuation funds investing in polluting industries, UniSuper acts as a role model of how members’ funds can be invested in eco-friendly industries while still generating profits for their members. The assessments of industries by UniSuper before investing in them make the fund stand out as a superannuation fund dedicated to responsible investments.
RecommendationThe research recommends that the steps taken by UniSuper are essential in generating returns for members while contributing to environmental initiatives. Furthermore, the study also commends UniSuper for their strategies and efforts for displaying their corporate citizenship as being socially and environmentally responsible.
References
Anderson, H. L., and Landau, I., (2006). Corporate social responsibility in Australia: A review. Monash U. Department of Business Law & Taxation Research Paper, (5).
Elizabeth, A. F., & Robinson, G. M., (2018). Mapping meanings of corporate social responsibility – an Australian case study. International Journal of Corporate Social Responsibility, 3(1), p. 14.
Gencsu, I., Whitley, S., Roberts, L., Beaton, C., Chen, H., Doukas, A., Geddes, A., Gerasimchuk, I., Sanchez, L. and Suharsono, A., (2019). G20 coal subsides: Tracking government support to a fading industry. ODI Report.
Market Forces, (2020). Out of line out of time. Retrieved from https://www.marketforces.org.au/wp-content/uploads/2020/03/Out-of-line-out-of-time-2020.pdf
UniSuper, (2014). Better regulation and governance, enhance transparency and improved competition in superannuation. Retrieved from https://treasury.gov.au/sites/default/files/2019-03/UniSuper.pdfUniSuper, (2020). How super works. Retrieved from https://www.unisuper.com.au/your-super/introduction-to-unisuper/how-super-worksUniSuper, (2020). Introduction to UniSuper. Retrieved from https://www.unisuper.com.au/your-super/introduction-to-unisuperUniSuper, (2020). Responsible investing. Retrieved from https://www.unisuper.com.au/investments/responsible-investing/our-approach-to-responsible-investingUniSuper, 2020. About our investment option. Retrieved from https://www.unisuper.com.au/investments/investment-options-and-performance/about-our-investment-options
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