28 March 2022 - APRA publishes Member Margaret Cole’s speech on sustainability in superannuation

In “Bridging the sustainability chasm”, Ms Cole warned of a growing sustainability gap between those funds that are well-placed to deliver strong member outcomes in to the future, and those – often smaller – funds on a declining trajectory.

Her comments included:

• “APRA’s analysis of sustainability in superannuation clearly demonstrates that larger funds are, in general, better equipped to deliver their members higher net returns and lower fees over the long-term. It shows the gap between the big and small ends of the industry is getting wider, making it ever harder for small funds to keep pace with rivals that enjoy far greater efficiencies and economies of scale.”
• “The reality is that no fund with under $10 billion in assets is going to become a $50 billion plus fund through business efficiencies alone. The only way to make that kind of jump is through a merger – ideally with a well-performing fund.”
• “We did find a sub-set of small funds that consistently bucked the sustainability trend, and were managing to grow. These funds generally provided specialised offerings, such as environmental, social, governance (ESG) focused products.”

“In the nine months since I took up my role at APRA, one of the observations to have struck me most sharply is the disparity in board capability across the sector. I have seen boards with very high-quality members operating effectively and focused on the best financial interests of members, and others where capabilities and practices are not to the standard required in this industry.”