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:
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.
ESG integration in each asset class - pdf, 386KB
Stewardship – using our influence(5)
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:
- S&P/ASX200 companies
- 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
International share voting - to 31 March 2018 - xlsx, 357KB
Share voting - 1 January to 31 March 2018 - pdf, 422KB
Share voting - 1 October to 31 December 2017 - pdf, 2.2MB
Share voting - 1 July to 30 September 2017 - PDF, 422KB
Share voting - 1 April to 30 June 2017 - pdf, 544KB
Collaborating for bigger impact
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.
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.
Research shows that skilled and suitably diverse boards make for better-governed companies and better long-term performance.
We're working to increase the board diversity of the companies we invest in.
Find out how we’ve been working to increase the board diversity of the companies we invest in through Active Owner Program.
Human rights and labour supply chain
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.