Six Takeaways from the 2022 ASFA Conference

Last week I had the privilege of attending the 2022 ASFA Conference?held at the Gold Coast Convention Centre. At this year’s conference there were clear themes around climate change, geopolitical turmoil and macro-economic headwinds facing Australia’s $3.5 trillion superannuation industry. In this post I’d like to explore my six key takeaways from the conference.

1. The impact of climate change is real; it is clear that superfunds will need play a role in Australia’s transition to clean energy through investment into renewables, but also through industry engagement and divestment of emission-intensive companies.

"Climate change is one of the most critical and complex challenges of our time, when history judges our generation, this will be one of the biggest issues that we will be held accountable on." Shemara Wikramanayake

1. ESG investment requires a patient approach; ESG pioneers Macquarie have shown that starting small and doubling down on your winners has proven to be a very successful strategy when it comes to investing in renewals and clean energy. Though it doesn’t come without its challenges, Macquarie’s Shemara also called out the need to leverage local knowledge and partners when navigating opportunities locally and aboard.
2. Superfunds need to do a better job at managing geopolitical, human rights and climate change risks within their investments. In this day and age with a more socially aware and digitally connected society, funds will need to be on the front foot when it comes to managing these risks or find themselves on the front-page news and under attack by activist groups.
3. The superannuation industry has and will continue to play a huge role in Australia’s future. Our superannuation system has become a major source for economic growth and socially stability. Superannuation is needed now more than ever as big economic issues confront Australia such as runaway inflation, rising interest rates, a global pandemic and now a war in Ukraine.
4. Australia’s superannuation system is one of the best if not the best retirement systems in the world. The combination of a pooled defined contribution system, the innovation driven by competition and the collaborative approach to investing makes the Australian system one of the most resilient and adaptable systems in the world - and a blueprint for future retirement systems.
5. COVID-19 was a big stress test of the defined contribution system. Overall, it did well in weathering the COVID-19 storm; however, there are areas for improvements. We need to look at how we add more flexibility into the system to cater for the changing nature of work and future emergency situations like COVID-19. Ideas from Fiona Steward of the World Bank included implementing flexible contribution rates for people with disrupted work. In addition, the provision of better access to super before retirement through sidecar savings could drive more engagement in super as well as being a safetynet for emergencies.

"Innovation within Australia’s superannuation system is profound." Ashby Monk

On reflection I think, as an industry, we should be proud of the system we have helped to create, one that is member first and has contributed an incredible amount to the lives of Australians. However, we should not take this responsibility lightly. We should acknowledge the privileged position we are in, and never lose sight of the key purpose of the system, that is to provide as many Australians as possible with an adequate income in their retirement.

Thanks for listening!

#ASFA #superannuation #ESG #climatechange