Future Super's decision not to invest in for-profit aged care has just paid off.
Future Super made the decision in the middle of last year to no longer invest in the listed aged care sector, following a number of concerning reports in relation to elder abuse and increases in complex contracts with aggressively one-sided clauses; and that we wouldn’t re-enter the sector until it was proven that these companies were acting in an ethical way.
This means that listed companies focused on the for-profit aged care sector like Aveo Group, Japara Healthcare, Estia Health or Regis Healthcare do not appear in the Future Super portfolio.
When we make decisions like this, we need to consider the financial and ethical risks against the potential benefits in remaining invested in these companies. Our ageing population is an investment “mega-trend” and most super funds and fund managers see big profits to be made in the sector. If run in a respectful and caring manner, aged care should also be an ethical investment, because it provides an important service to a vulnerable demographic of our population.
However, evidence was mounting that too often companies in this sector were failing in their duty of care to their residents.
This presented an unacceptable ethical risk for Future Super. I don’t know of any other super fund, including any other ethical super fund, that has taken the same stance that Future Super has on this issue. While it was a decision made on ethics, our fund members have seen some financial benefit from the decision.
Time and time again we see that when companies or sectors put their social licence to operate at risk through questionable practices, their share prices suffer. Future Super members have been protected from the recent losses faced by the aged care sector. They can also rest assured that their superannuation wasn’t tied up in supporting these businesses or abuses that may come to light as part of this Commission.
No doubt there’s some politics behind the Royal Commission announcement, but we share the view that the ethics of the listed aged care companies in Australia should be put in the spotlight.