Socially Aware option and tobacco exclusions

We've recently made changes to our Socially Aware investment option. Read our statement to see what's changed.

Socially Aware investment option

AustralianSuper's ESG and Stewardship program and tobacco exclusion apply to the Socially Aware option.

In addition, the Socially Aware investment option applies investment exclusions (or 'screens') based on environmental, social and governance criteria as detailed below.

Corporate securities and cash at bank

The following screens apply to corporate securities (such as shares, bonds, loans and other equity or debt securities), and to financial institutions that hold cash for the benefit of the Socially Aware investment option. They seek to exclude investments in companies that meet the exclusion criteria ('excluded companies'), as described below:

Exclusion Description of exclusion criteria
Thermal coal, oil and gas Companies that:
  • provide evidence of owning thermal coal, oil and gas reserves1, and/or
  • derive any revenue (reported or estimated) from:
    • oil and gas extraction and production,
    • the mining of thermal coal and its sale to external parties (excluding royalty income for companies that are not involved in thermal coal extraction), and/or
    • power generation using fossil fuels (thermal coal, liquid fuel and natural gas).
Controversial weapons Companies that produce, or companies that own 50% or more of companies that produce:
  • whole weapons systems, essential intended use or dual use components or delivery platforms for cluster munitions,
  • whole weapon systems, essential intended or dual use components for anti-personnel or anti-vehicle landmines,
  • whole weapon systems or critical components for biological or chemical weapons,
  • incendiary weapons using white phosphorus,
  • depleted uranium weapons, ammunition or armour, and/or
  • weapons that use non-detectable fragments.
Nuclear weapons Companies that, or companies that own 50% or more of companies that:
  • produce nuclear warheads, missiles, and delivery platforms capable of deploying nuclear weapons,
  • produce essential intended or dual-use components for nuclear weapons and nuclear weapon delivery systems, and/or
  • provide support services for nuclear weapons, including companies with contracts to operate/manage government-owned facilities that conduct research and development, testing, simulations, and other essential sciences on nuclear weapons.
Uranium Companies that:
  • provide evidence of owning uranium reserves1, and/or
  • own or operate active uranium mines.
Animal welfare Companies that:
  • conduct animal testing for non-medical products unless they:
    • disclose one or more best practice statements or policies that address the welfare of animals used for laboratory testing, and
    • disclose statements that they are researching or executing alternatives to animal testing, or that they have adopted the ‘three Rs’ (reduce, refine and replace the use of animals in animal testing), and/or
  • engage in the long distance transport and/or export of animals for the purpose of selling live animals for slaughter, husbandry, and breeding subjects, including specialised transportation services specifically designed to facilitate live exports, that present a significant risk to animal welfare. Companies that own 50% or more of companies involved in such activities are also excluded.
Gambling Companies that generate 5% or more revenue (maximum reported or estimated for the most recently completed fiscal year) from:
  • owning or operating gambling facilities, online gambling websites, platforms, or mobile applications,
  • providing products or support services fundamental to gambling operations, and/or
  • licensing their brand name to gambling products.
Palm oil Companies that, or companies that own 50% or more of companies that:
  • cultivate oil palm trees and harvest fresh fruit bunches used to produce palm oil products, and/or
  • are involved in the trade or distribution of palm oil products (excluding companies that distribute products that contain palm oil as one of their ingredients or components).
Tobacco Refer to Tobacco exclusion below.
Controversies Companies that have received the highest severity rating on a labour rights and supply chain, human rights and community impact, environmental or governance controversy.
Single gender boards Companies that have single gender boards.
  1. Reserves, in this context, are thermal coal, oil, gas or uranium that can be extracted from known fields at an economical cost.

Unless a screen applies, the Socially Aware investment option can still invest in the following companies that:

  • own reserves of, or derive revenue from the mining and sale of, metallurgical coal, which is generally used in the production of steel,
  • lend to, or conduct other financial transactions with excluded companies,
  • buy, sell or process products from excluded companies, for example petrol refiners, distributors and retailers, and/or
  • provide products and services to excluded companies, for example insurance, security, catering and office suppliers.

Government issued fixed interest securities

We also screen government issued fixed interest securities (such as bonds, loans and other debt securities) that have received the lowest two out of seven ratings on how well a country manages underlying factors across various ESG issues (‘excluded countries’). This exclusion also captures certain state and local authorities which are exposed to similar ESG risks as countries.

Use of derivatives

The Socially Aware investment option may use derivatives for liquidity and portfolio management purposes. Derivatives are based on standard market indices and it is not possible to screen individual securities within the relevant market index.

Through daily monitoring of individual exposures, we aim to ensure that any indirect exposure to excluded companies is limited to 1% of the option’s total assets.

If, due to market movements on any given day, our indirect exposure to excluded companies via derivatives exceeds 1% of the option’s total assets, we will endeavour to reduce this exposure to below 1% as soon as practical, and in any event within 30 days.

During times of significant market volatility or substantial member cash flows, the use of derivatives that cause indirect exposure to excluded companies above the 1% threshold may be temporarily permitted if it’s determined to be in members’ best financial interests. In exceptional circumstances, this condition may persist for more than 30 days.

AustralianSuper’s tobacco exclusion

AustralianSuper seeks to exclude (or 'screen') companies involved in the production of tobacco products, including companies that grow or process raw tobacco leaves, from its investment options.

Tobacco products include traditional and alternative tobacco smoking products, such as e-cigarettes.

This exclusion doesn’t apply to:

  • companies that:
    • own less than 50% of a company involved in the production of tobacco products,
    • license brand names to tobacco products,
    • buy, sell or distribute tobacco products, and/or
    • produce and supply essential products for the production of tobacco products,
  • the use of derivatives that may have an indirect exposure to tobacco, or
  • investments in the Member Direct investment option.

Implementation and monitoring of screens

We engage third party ESG research providers to create lists of excluded companies and excluded countries (‘exclusion lists’) based on the tobacco exclusion and Socially Aware investment option screens. The research providers have defined methodologies and research processes that determine their exclusion lists.

Where securities are held outside the coverage universe of the relevant ESG research provider, we may:

  • exclude all securities outside the coverage universe of the relevant ESG research provider, or
  • provide the screen criteria to the relevant investment manager(s) and request that they exclude securities outside the coverage universe of the ESG research provider that meet the screen criteria.

ESG research providers will endeavour to assess any new additions to indices in their coverage universe within one quarter of their inclusion in the relevant index, and in any event within two quarters of their inclusion in the relevant index. Prior to any assessment being completed, these companies are not screened and may be held.

Exclusion lists from ESG research providers are generally provided monthly. We and any relevant third party investment managers endeavour to divest from current holdings for any new exclusions as soon as practical, usually within 30 days of receiving updated exclusion lists, and in any event by the end of the following month after receiving updated exclusion lists.

Exclusion lists are also used to monitor indirect exposure to excluded companies via derivatives for the Socially Aware investment option. If, as a result of updated exclusion lists, our indirect exposure to excluded companies via derivatives exceeds 1% of the option’s total assets, we will endeavour to reduce this exposure to below 1% as soon as practical, and in any event within 30 days of receiving updated exclusion lists.

ESG research providers rely on company reported information in public documents, investor presentations and websites when determining exclusion lists, and we, and any third party investment managers, rely upon the accuracy of these exclusion lists when applying the screens.

Implementation of the screens may be affected by the accessibility and accuracy of data, an error in source data used by third party providers, different definitions and methodologies of research providers used by third party investment managers, or other operational or structural constraints. This may result in inadvertent holdings, typically over the short term.

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