Market Narratives Podcast - Responsible investment, market efficiency and ESG alpha

Martyn Myer AO, Immediate past President of The Myer Foundation, and Alexis Cheang, partner and head of responsible investment of the Pacific region at Mercer, joined host Alex Prioas on Investment Magazine's Market Narratives Podcast to discuss the journey to ESG investments.

Listen to the epsiode here.

The Myer Foundation partners with Mercer to rapidly transition to 100 percent sustainable investments

The Myer Foundation is demonstrating how Australian philanthropic investors can act now to rapidly transition their portfolios to sustainable investments that achieve genuine social and environmental good and superior financial performance.

In 2020, thanks to a partnership with Mercer’s Responsible Investment business, The Myer Foundation’s ESG (economic, social, governance) aligned investments have nearly doubled to represent almost the whole portfolio.

A global leader in Responsible Investment advice and solutions, Mercer was commissioned in March this year to help implement a substantial portfolio restructure and fast track progress towards The Myer Foundation’s ambitious goal of achieving 100 percent ESG investment by November 2022, which it set in November last year.

Mercer’s research across asset classes around the world found that the best sustainable investment strategies in Australian equities delivered an annual return of up to 10.4 percent per annum over the last three years to June 2020, as compared to a 5.2 percent return from the ASX300, and a 5.3 percent return from the median actively managed Australian equities fund over the same period.

Since its establishment 60 years ago, The Myer Foundation has been at the vanguard of Australian philanthropy. In recent years, The Myer Foundation sought to amplify its social and environmental impact by aligning its investments with philanthropic mission.

Immediate past President Martyn Myer AO, who stepped down in November after 11 years in the role and spearheaded the transition, said there has been a rapid growth in high quality, financially competitive products using the Shared Value thesis, aligned with targets such as the United Nation’s Sustainable Development Goals (SDGs).

“Shared Value posits that corporate success and improved social and environmental conditions are in fact inherently linked – and when achieved together, they can dramatically enhance future prosperity,” Mr Myer said. “The SDGs provide a clear pathway to address social, economic and environmental challenges and with 193 nations committed to achieving them, it signals broad global consensus, creating a powerful economic tailwind for aligned companies.”

Mercer’s team was led by Helga Birgden, Partner, Global Business Leader of Responsible Investment and supported by Alexis Cheang, Partner, Responsible Investment.

“Mercer is thrilled to partner with The Myer Foundation to support its commitment to being 100 percent sustainably invested by 2022,” Helga Birgden said. “Through this project, Mercer has worked with The Myer Foundation to identify the best investment managers globally that we expect to deliver strong investment returns while contributing to solutions to sustainability challenges and a positive impact on the environment and local communities.

“While not all Responsible Investment or ESG funds will outperform over all periods, as long-term investors focused both on returns and truly sustainable investment solutions, rigorous investment and operational due diligence is critical for manager selection,” she added.

Mr Myer said The Myer Foundation’s rapid portfolio transition positions it to play a role in changing the attitude that organisations must choose between doing good and making competitive returns.

“The market has moved on from simple equity divestment or exclusionary investing. New ESG products are producing strong financial, social and environmental gains, which are accelerating the capacity of investors to transition their entire investment portfolios sustainably. The Myer Foundation’s portfolio is rapidly approaching 100 percent ESG alignment, two years ahead of schedule.

“Our portfolio restructure can inform investors seeking to enliven their portfolios to meet the challenges faced by the global community. We encourage more of Australia’s investors to transition towards 100 percent responsible investing.”