Australian super funds that engage in "responsible investing" have outperformed those that don't, a new report has found.
The Responsible Investment Association Australasia said 13 funds it rated as leaders in screening for environmental, social and governance factors outperformed 41 others over five-, three- and one-year time frames.
Those 13 funds had an average one-year return of 8.11 per cent, compared to the 7.07 per cent for the MySuper option of the others.
Their average three-year return was 9.81 per cent, compared to 8.62 per cent; and over five years the return was 8.71 per cent compared to 7.74 per cent.
"It was surprising the extent to which the funds outperformed," RIAA chief executive Simon O'Connor said.
The 13 high performers were Australian Ethical, AustralianSuper, CareSuper, Cbus, Christian Super, First State Super, Future Fund, Future Super, HESTA, Local Government Super, Unisuper, Vic Super and Vision Super.
Broadening its analysis to include two sovereign wealth funds - the Future Fund and NZ Super Fund - as well as state-managed fund TCorp, the report found that 46 of the 57 funds it looked at had some kind of responsible investment commitment in place, the same as last year.
The most common "negative screen" was refusing to invest in tobacco manufacturers, which 33 of the 57 funds did, while 21 declined to invest in arms manufacturers and seven had some kind of exclusion related to fossil fuels.
Others funds actively look for investment opportunities with particular social or spiritual impacts, such as social housing, renewable energy or regional development.
The report highlighted how First State Super engaged with ASX-listed energy producer Origin Energy to understand its approach to climate change and its promise to exit goal-fired generation by 2032.
Other funds have voted against boards and proxy voting advisors on certain issues.
Mr Simon said that there were transparency issues, however, with half the super funds engaged in corporate engagement not publicly reporting on their activities.
"Furthermore, many of our largest super funds are still not showing clients how their money is being invested on their behalf. Just 12 per cent of super funds publish their full equities holdings"
The 57 funds analysed account for $1.75 trillion in assets under management.
The report said that 44 per cent, or $980 billion, of Australia's $2.25 trillion in professionally managed assets could be considered "responsibly invested" in that ethical, environmental and social concerns are considered.