Environmental, social and governance

ESG integration refers to the way we integrate ESG considerations when deciding which assets and companies to invest in and assessing their investment value. Our ESG integration approach varies by asset class and the characteristics of our investment, including whether we’re investing directly or through external managers.

As an active investor we exercise the rights and responsibilities of being a large shareholder. Our objective is to effectively communicate our long-term investment interests to companies so that we can improve returns for our members.

Direct engagement is important as it enables us to influence the make-up of company boards and encourage positive behaviour on issues that impact our members.

AustralianSuper predominately seeks to influence companies through our voting and engagement activities, and sometimes gets involved in class actions.

Company engagement

We regularly engage with the companies we invest in and the fund managers who invest on our behalf.

We believe that proactive and early engagement with companies on ESG factors gives us the ability to influence outcomes that can maximise investment performance for our members.

Our engagement process encompasses three key areas:

• Ongoing relationship building: ensure companies understand the importance of ESG factors on an ongoing basis.
• Themes based engagement: focus on specific ESG themes that our ESG program has identified as a priority.
• Ad hoc specific issues engagement: seek resolution of specific ESG concerns or to engage on a particular voting matter.

AustralianSuper’s engagement program works on several levels:

• Engaging directly with companies
• Working in conjunction with the Australian Council of Superannuation Investors (ACSI)
• Working collaboratively with other like-minded investors.

Class actions

Class actions are a way that shareholders, as a collective group, can claim for losses against a company where a reasonable case can be made that the loss occurred due to breaches of corporate regulations. Class actions aren’t appropriate in cases where a loss is a result of a judgement, where directors applied reasonable skill and judgement, which turned out to be wrong.

AustralianSuper uses class actions as a:

• last resort governance mechanism;
• cost-effective way to recover member losses caused by a company’s misleading and deceptive conduct; and
• mechanism to improve general governance standards in the market.

In our role as Trustee for all members, we carefully consider whether or not we will join a Class Action. We generally only participate if we've had a large investment across the whole portfolio. If we participate we do so on an anonymous basis to ensure we do not adversely affect other investments. If the Class Action is successful any proceeds, after costs, are apportioned back to the investment options that held the investment.

As a general rule we will participate in class actions as a class member where:

• It has been determined that there is a genuine allegation of a breach of law;
• This breach resulted in a large financial loss for the Fund;
• A reliable and reasonable assessment that there are low (and reasonable) costs associated with the litigation has been made; and
• It has been assessed that there are no significant reputational risks to AustralianSuper

Member Direct and Class Actions

Class Actions in relation to smaller investments, including those in Member Direct are not generally pursued. Members are unable to participate individually as they do not directly own the investment. Proceeds, after costs, from successful actions are apportioned back to the relevant investment options to offset some of the costs of the option. They do not go back to individual members.

Share voting

Voting on resolutions at general meetings is a key right and responsibility for shareholders. It presents a significant opportunity for us to communicate our view on how companies are performing in creating long-term investment value for members.

AustralianSuper votes on company and shareholder resolutions for Australian and international listed companies. Every year, we vote on company and shareholder resolutions on issues ranging from director elections and remuneration plans to climate change and mergers and acquisitions.

The Fund supports resolutions that enhance value, promote or require appropriate disclosure, ensure effective board composition and operation, and encourage appropriate pay-for-performance remuneration outcomes.

We actively consider climate change-related shareholder resolutions on which we vote, supporting those we believe are effective in achieving a net zero economic transition and/or will result in improved disclosures on climate change.

We may consider advice from proxy advisors and external managers, but ultimately make our own decisions based on what we believe will promote long-term company value and investment outcomes for members.

We value transparency in relation to our voting and vote on thousands of resolutions each year. You can view our voting records online and more about our approach to voting via the Share Voting Approach document below.

AUSTRALIANSUPER’S SHARE VOTING APPROACH (PDF) ESG and stewardship policy (PDF)

Share voting records

Many members have different values, so it’s important we consider these preferences in our investment choices. Every two years we survey members to ensure we keep up to date with what’s important to them.

Our latest research showed that most members were happy with the investment approach of our Balanced option and its approach to ESG integration – this approach is consistently applied across all options.

For members who want the choice to invest based on their values, we offer the Socially Aware and Member Direct options.