Oct 17, 2009 - 8:50am
Eight out of ten people agree that investment managers in the
superannuation industry should not receive bonuses based on short-term
performance when their job is to protect nest eggs over the long-term,
an AUSPOLL survey reveals.
The poll, commissioned by the Climate
Institute, also shows that the majority of people, 56 per cent, would
like their superannuation fund to invest in solutions to climate change –
a major long-term risk to the global economy – such as clean energy.
light of the global meltdown, we’re understandably seeing a lot of
public hostility toward the ‘Gordon Geckos’ of the financial world and
the polling shows that in relation to superannuation people want
change,” Climate Institute CEO John Connor said.
superannuation investment chain currently rewards managers for
short-term profits with little incentive to plan for long-term risks
such as climate change.
“The investment incentive chain needs to
be fundamentally realigned to promote long-term profitable and
sustainable investments in areas such as the emerging low-carbon
"The current financial crisis is an example of
short-termism winning out over managing long-term risks and if markets
and governments don’t learn lessons from this meltdown we risk history
The poll found that 79 per cent of people
agreed with the statement that ‘managers in super funds should not
receive bonuses based on short-term performance when their job was to
manage long-term investments’. Just three per cent disagreed with the
statement and 17 per cent had no opinion.
The Climate Institute
recently launched a world’s first initiative, designed to assist super
funds think long-term and better manage the risks and opportunities of
The joint initiative, with the Australian
Institute of Superannuation Trustees, includes an interactive survey of
80 of Australia’s largest superannuation, with nearly a trillion dollars
under management, and provides them with best practice guidelines to
enable them better manage the material impacts of climate change and the
consequences of government policy.
In order to look after the
long-term interests of members, funds will be encouraged through this
initiative to build capability in managing climate risk and opportunity,
to invest in companies that have better strategies in place to manage
climate risks, and to take advantage of emerging clean technology and
carbon permit markets.
“If there is a silver lining to the market
turmoil it would be that it shines a light on the dangers of sweeping
long-term risks like sub prime mortgages and climate change under the
carpet,” Mr Connor said.
“Let’s use the market meltdown as an
opportunity to rebuild with incentives that meets super member and
community expectations and rewards long-term, sustainable investment
which can drive Australia’s transition to a globally competitive
Note: The AUSPOLL online omnibus survey of 1000 people was taken from 9th to 13th October 2008.