What responsible investment means at AustralianSuper
Investing responsibly means being active on ESG issues today,
so we can deliver strong performance for decades to come. Here’s how we’re
working on issues like climate change, human rights and gender diversity.
What responsible investment means at AustralianSuper
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What difference does it make?
At AustralianSuper, investing responsibly means being active on Environmental, Social and Governance issues today
So you can enjoy a better tomorrow.
Environmental Social Governance matters because
Companies with better ESG management perform better.
A study of companies who scored highest on ESG momentum significantly outperformed those who scored the lowest. MSCI: Foundations of ESG Investing: How ESG affects equity valuation, risk and performance, July 2019.
As investors, we need to think ahead about the risks and issues that can impact the growth prospects of the investments we make today to make sure that the assets we invest in can deliver strong returns in decades to come.
Environmental: Climate Change
As a large asset owner, we have an important role to play in driving the low-carbon transition across the global economy.
So we’re collaborating on a global scale with a group of investors who manage US $34 trillion in assets worldwide to make an even bigger impact by engaging with the world’s largest carbon emitters to take action on reducing emissions in line with the Paris Agreement.
Climate Action 100+
< 2 degrees
Social: Modern Slavery
In 2016, there were estimated to be more than 40 million victims of slavery globally with an estimated 15,000 living in Australia in 2018.
International Labour Organization (2017)
Global Slavery Index (2018)
The Australian Modern Slavery Act was passed in 2018.
We’re engaging with companies on modern slavery risks, domestic workforce issues and labour supply chain management.
And working to improve the disclosure of workforce and supply chain data across industries.
Governance: Gender diversity on company boards
In 2016, we engaged with 17 ASX200 companies who didn’t have women on their boards. Now only one of those companies doesn’t.
We’re advocating to increase female representation on ASX200 boards to at least two female directors.
And we’re doing a lot more.
Which is why our ESG program is globally recognised.
PRI Global 2019 rating for Overarching Approach to Responsible Investment
Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.
This information may be general financial advice which doesn’t take into account your personal objectives, situation or needs. Before deciding if AustralianSuper is right for you, read the Product Disclosure Statement at australiansuper.com
AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, the Trustee of AustralianSuper ABN 65 714 394 898.
ESG Management is an integral part of our Active Owner Program
Our Active Owner Program is embedded across our investment decision-making framework at three levels:
1. ESG integration – choosing our investments(1)
Making sure ESG factors are considered starts before we make an investment and continues for as long as we keep it, whether we’re investing directly ourselves or through external managers.
Download our factsheet to see how we integrate ESG factors into each asset class.
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.
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 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.
AustralianSuper votes on all resolutions in:
any other Australian listed company in which AustralianSuper is a substantial shareholder
all Australian companies held internally
major global companies
Voting on resolutions at general meetings is a key right of a shareholder. Voting presents a significant opportunity to influence, particularly given AustralianSuper’s often large shareholding size.
Every year, shareholders of companies are asked to vote on issues ranging from director elections and remuneration plans to constitutional changes and mergers and acquisitions.
Our voting decisions aim to protect our members’ interests and produce outcomes that:
Create and/or enhance company value and;
Ensure value is fairly distributed.
To help us make informed decisions, we harness an active process that seeks voting advice from proxy advisors and fund managers. Our ultimate decision is based on what we believe is best for our members.
We value transparency in relation to our voting and vote on thousands of resolutions each year. We don’t announce our voting intentions in advance as this can restrict our ability to engage with companies or signal markets on price sensitive issues.
We use the Australian Council of Superannuation Investors (ACSI) as a proxy voting advisor, which is a key input into our active voting process.
Share voting records
2019 Stock Voting – 1 October to 31 December
- pdf, 1.5MB
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.
ESG and stewardship policies
Australian Asset Owner Stewardship Code
a signatory to the Australian Asset Owner Stewardship Code (the Code). Download
our Stewardship Statement to see how we promote long-term value creation in the
listed equities we invest in through our stewardship activities.
Working with industry investors and groups gives us better insights and more influence on shared ESG issues.
The Australian Council of Superannuation Investors
AustralianSuper, with other major Australian super funds, is a member of the Australian Council of Superannuation Investors (ACSI) engages with companies and policymakers with the ambition of progressing material ESG issues on behalf of its superannuation fund members.
We also use ACSI as a proxy voting advisor, which is a key input into our active voting process.
Principles for Responsible Investment
We’ve been a signatory to the United Nation’s Principles for Responsible Investment (PRI) since 2008. PRI develops and implements six global principles that help integrate ESG factors into mainstream investment practices and provides guidance on key challenges.
Membership of the PRI means we have agreed to implement these principles, work collaboratively with other signatories on responsible investment issues and be reviewed on an annual basis on our progress on ESG activities.
Other collaborative initiatives
Investor Group on Climate Change: an industry group that aims to ensure that risks and opportunities associated with climate change are incorporated into investment decisions for the benefit of the investor.
Carbon Disclosure Project: a global initiative that asks the largest companies to disclose investment-related information about their greenhouse gas emissions.
ESG Research Australia: a research organisation that aims to encourage better investment decision making through better ESG investment research.
Asian Corporate Governance Association: a member organisation dedicated to working with investors, companies and regulators in the implementation of effective corporate governance throughout Asia.
Reporting our progress
We participate in global industry reporting projects to monitor the success of our Active Owner Program.
PRI Global Assessment Report
The PRI assesses each signatory annually. In the 2019 PRI Global Assessment Report, AustralianSuper achieved the highest possible rating of A+ for Overarching Approach to Responsible Investment.
AODP Climate Change Pension Fund Index
We participate annually in the Asset Owners Disclosure Project. This global survey considers how well asset owners manage the issue of climate change across their portfolios and each funds’ disclosure regarding climate change management. AustralianSuper ranked 18 out of the 100 largest global pension funds in the 2018 index.
Responsible Investment Association Australasia
We’re one of 14 super funds to be awarded a Leading Responsible
Investment Rating from the Responsible Investment Association Australasia
(RIAA). This is the highest possible rating from RIAA’s 2019 Responsible
Investment Super Study of 57 funds.
Active Owner Program in practice
ESG issues are important as they can impact the future value and investment performance of assets, which is important for our members.
There are many important ESG issues facing asset owners today. Here’s an overview of some of the biggest issues we’re managing through our Active Owner Program.
Climate change can have a broad ranging impact on economies, financial markets and our members’ investments over the long term. It has the potential to effect the longevity of assets, companies and their valuations in a variety of ways.
Investments in property and infrastructure, like toll roads, airports and ports, may be affected and there could be an impact on the operations of many companies in which AustralianSuper invests.
We actively engage with companies on the risks relating to future fossil fuel consumption and physical changes in the climate.
Rather than simply excluding particular investments on the basis of these factors, we weigh the risks and returns for each investment and determine the appropriate exposure.
We understand that climate change is an important issue for members so we offer them a choice of investing in our Socially Aware option. It excludes companies that own fossil fuel or uranium reserves.
Find out more about our Active Owner Program and Climate Change.
Inadequate supply chain management can expose companies to operational, financial and reputation risks relating to child or forced labour, equality and discrimination and poor working conditions.
The labour supply chain is the chain of people that link the activities involved in the planning, sourcing of materials, and production of goods. These activities can take place in more than one country.
From an investment perspective, these issues can impact the long-term value of a company.
See how we manage these issues through our Active Owner Program.
Executive remuneration is a key issue in society and for investors alike. Ensuring that there are the right long-term value creation mechanisms in place in a company and that value is fairly distributed is an important focus of our active owner program.
Our active owner program aims to ensure remuneration frameworks deliver appropriate pay for performance outcomes, reasonable pay levels and transparent disclosure.