The following is an overview of AustralianSuper's key Corporate Governance policies:
UN Principles for Responsible Investing (UNPRI)
In May 2007, AustralianSuper became a signatory to the UN Principles for Responsible Investing UNPRI.
What does this mean?
The objective on the UNPRI is to develop and implement a set of global principles that facilitate the integration of Environmental, Social and Governance (ESG) issues into mainstream investment practices.
The Principles were an initiative of the UN Secretary-General and developed by large institutional investors. The six Principles can be applied across all sectors of the funds portfolio and provide guidance on key challenges.
The Principles state they are voluntary and aspirational and designed to enhance long-term benefits throughout the investment sector. It is not to be used as a screening purpose but as a tool for ESG engagement.
Six principles
Under the six UNPRI principles we will:
- Incorporate ESG issues into investment analysis and decision-making processes
- Be active owners and incorporate ESG issues into our ownership policies and practices
- Seek appropriate disclosure on ESG issues by the entities in which we invest
- Promote acceptance and implementation of the Principles within the investment industry
- Work together to enhance our effectiveness in implementing the Principles
- Each report on our activities and progress towards implementing the Principles.
AustralianSuper and UNPRI
The UNPRI is based on the premise that ESG issues can affect investment performance and that the appropriate consideration of these issues is part of managing an investment portfolio. It’s a tool that will lead to a greater understanding of ESG issues and a way of managing ESG risk. Its outcome should enhance and protect member benefits.
AustralianSuper already complies with a number of the UN Principles and, in addition, has developed a UNPRI ‘action list’ that will be worked through gradually over time.
More information can be found at www.unpri.org
Engagement Policy
Australian Council of Super Investors (ACSI) is a not for profit organisation formed in 2001 that provides corporate governance research and services to its members.
ACSI represents AustralianSuper on all corporate governance matters.
Further information on ACSI can be found at www.acsi.org.au
Share Voting Policy
As a major institutional investor, AustralianSuper has a responsibility to vote on all ASX 200 company resolutions.
The objective is to vote on all voting items in a manner that will:
- Create and/or enhance company value; and/or
- Ensure the value is fairly distributed.
As a general guide, AustralianSuper supports the Australian Council of Super Investors (ACSI) Corporate Governance Guidelines. However, we do reserve the right to take an alternative position to that advocated by ACSI, where we believe it to be in the long-term interests of our members.
Final voting outcomes are arrived by combining the governance advice received from ACSI, overlaying it with investment advice from Fund Managers, and considering Fund policy to arrive at its own voting outcome.
AustralianSuper share voting guidelines
AustralianSuper has developed voting guidelines to assist in its internal voting decisions. As they are guidelines only, they will evolve as market and governance situations change. To ensure they remain current and relevant, these guidelines will be reviewed at least, on an annual basis and any proposed changes will be tabled for consideration to the Investment Committee and the Board.
Voting decisions
Every quarter, the list of decisions for the past quarter are to be posted on the website:
Matters on which AustralianSuper votes
AustralianSuper votes on all voting matters, in relation to listed ASX 200 Australian companies only, including:
- Employee/director remuneration
- Appointment of Directors.
- Auditor appointment and independence
- Changes to capital structures that may affect shareholder value
- Voting rights among shareholders
- Significant issues that concern social or environmental matters
- Resolutions proposed by shareholders rather than by the Board
- Where AustralianSuper holds more than 5% of the shares in the listed company
- Where a material conflict could exist in relation to the company or subsidiary
Environmental, Social & Governance (ESG) Investment Policy
As a long-term investor, AustralianSuper is aware that environmental, social and governance (ESG) issues may affect its investments. As trustees, AustralianSuper is required to assess and manage all foreseeable risk factors effectively. AustralianSuper considers ESG as an investment-related risk.
AustralianSuper's broad approach to managing ESG risk has been to establish several policies, including stock voting, engagement and class action policies. AustralianSuper is also a signatory to the United Nations Principles of Responsible Investing (UNPRI), which is a set of six principles that facilitate the integration of ESG into mainstream investment practices.
AustralianSuper encourages ESG considerations into the investment analysis process by engaging with various parties, across the investment chain. This is achieved through three broad tools:
- ESG engagement service provider
- collaborative initiatives
- active engagement.
AustralianSuper utilises the Australian Council of Super Investors (ACSI) as an ESG engagement service provider. ACSI engages with policy makers and companies with the ambition of progressing material ESG issues.
AustralianSuper reviews all appropriate collaborative initiatives to determine which is the most relevant and most effective at encouraging companies, brokers and fund managers to consider ESG issues.
The Fund encourages all listed managers to consider ESG investment issues by actively engaging with them, incorporating a ‘statement of intent’ into future investment management agreements and by requesting updates of their ESG considerations.
AustralianSuper understands that investments in unlisted assets can carry higher ESG risks due to its direct involvement with those assets. Therefore, for all new investments, AustralianSuper seeks to be satisfied that the due diligence process identifies ESG risks and has a strategy for them. For current investments, the Fund seeks to understand how the managers are monitoring the ESG risks in the asset.
AustralianSuper relies on its investment adviser to communicate its ESG investment concerns to fund managers and to keep the Fund informed of ESG investment issues and trends.
The Fund's Investment Department reports on its ESG activities to AustralianSuper’s Investment Committee on a regular basis.
AustralianSuper’s general ESG investment beliefs are:
- Our fiduciary duty to members is critical. Appropriate ESG investment activities will be explored, but will not be undertaken at the expense of its fiduciary duty. Usual investment criteria applies
- We strive to 'think globally, act locally'. We acknowledge that ESG issues can have global consequences, but realise they can have the greatest impact where we have a direct influence.
- AustralianSuper understands that:
- ESG can have an impact on investment valuations
- ESG investment considerations will develop over time
- Evolvement within AustralianSuper’s investments will be progressive; and
- AustralianSuper does not seek to have an ‘exclusionary’ approach, but to have an ‘engagement’ approach towards ESG.