Your super is invested responsibly
Every investment we make considers our environmental, social and governance (ESG) standards and principles.
We're one of Australia's largest investors in ESG-themed strategies, with more than $12 billion in funds under management across these investment options. We have over 10 years' experience in responsible investing and a long-held commitment to incorporating ESG factors into all our investment decisions.
Our approach to responsible and sustainable investing
Our ESG approach
We're an active owner
We seek ESG integration
We provide you with choice
We advocate and collaborate
We’re committed to achieving net zero absolute carbon emissions in our investment portfolio by 2050, in alignment with the Paris Agreement.
Aligning with the Paris Agreement reinforces our long-held commitment to incorporate environmental, social and governance (ESG) factors into all our investment decisions.
How we assess investments
The companies we invest in must embrace and adopt a robust and rigorous approach across ESG factors.
Environmental factors
- Waste management
- Energy efficiency
- Biodiversity
- Packaging
- Plastics
Social factors
- Human rights in the supply chain
- Occupational health and safety (OHS)
- Diversity
- Community standards/social licence to operate
- Employee engagement and turnover
Governance factors
- Remuneration
- Board succession
- Company culture
- Reporting on ESG factors
Climate change factors
- Mitigating and managing climate change risks
- Identifying and maximising climate change opportunities
- Reporting on the management of the physical and transitional risks associated with climate change and a de-carbonising economy.
Our ESG principles
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Sustainability of earnings
As a long-term investor, the sustainability of a company's earnings is of paramount importance, ESG factors are important considerations in determining earnings sustainability.
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Our financial commitment to our members
Our financial commitment to members remains our top priority. We have a legal obligation to manage the financial outcomes of our members within the risk objectives of the respective investment options.
Within thematic options such as Sustainable and Environmental options, we remain accountable for ensuring that portfolio construction is consistent with the overall risk and return objectives of the option.
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Investments process
In relation to security selection, the integrity and independence of the investment process can't be compromised by external influences that may conflict with our financial commitment.
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ESG issues are complex
There are challenges in managing the expectations of stakeholders with different perspectives. ESG issues are inherently qualitative in nature and can be difficult to quantify.
Examples:
- Some stakeholders may prioritise social considerations over environmental concerns
- Poor governance structures could lead to greater risks being taken, poor culture or inappropriate use of shareholder funds.
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Pragmatic investing
We’re a pragmatic investor, not an 'activist' fund. Our initial investment in any company is based on sound governance, quality management and strong business fundamentals.
In the event that governance, management or business fundamentals are compromised, we’ll take the necessary steps to protect member interests. This may include additional engagement with the company, proxy voting or selling out of the security.
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Climate risks are investment risks
Climate risks and the decarbonising of the economy have the potential to present a systematic market wide investment risk and opportunity. This warrants explicit consideration in our investment process.
Advocating and collaborating for change
By working with peak industry bodies and like-minded investors, we gain better insights into our investments’ ESG practices and can collaborate to drive initiatives.
Some of the peak industry bodies we work with are:
- Australian Council of Superannuation Investors (ACSI)
- Investor Group on Climate Change (IGCC)
- Responsible Investment Association Australasia (RIAA)
- Asian Corporate Governance Association (ACGA)
- ESG Research Australia (ESG RA)
Tobacco companies
We don’t invest in any companies considered as manufacturers of cigarettes and tobacco products. We’ve always excluded tobacco from our sustainable investment options, and since 2011 we’ve excluded tobacco companies from all our investment options.
We decided to exclude tobacco companies from all our investment options, because:
- tobacco stocks were a small part of our total portfolio and had delivered minimal outperformance
- the tobacco industry faces an uncertain regulatory future and has potential long-tail liabilities associated with it.
For these reasons, we believe the long-term risks of owning tobacco stocks outweigh the benefits.
Thermal coal mining
We exclude companies that generate greater than 10% of their revenues from thermal coal mining.
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See more on our thermal coal miner exclusion process
Our climate change position statement is underpinned by a set of guiding beliefs and principles; and one of our beliefs is that thermal coal for electricity generation is the fuel most at risk in the transition to a low-carbon economy. A result of this energy transition might see mines close before the end of their economic life (known as asset stranding).
In response to this risk, we use 2 methods (our compliance framework) to screen out certain companies with over 10% of revenues associated with thermal coal mining (excluding companies classified as service providers or utility companies):
- Investment manager restrictions – Our internal and external investment managers are not permitted to invest in companies that derive more than 10% of their revenue from thermal coal mining.
- Compliance monitoring – Our custodian will use a blacklist, created with data from an external provider, to identify stocks and companies that exceed the 10% revenue from thermal coal mining revenues threshold.
Limitations
Reporting on underlying business units can be inconsistent, even for those companies that do report.
While we aim to be as transparent as possible, information gaps and timing differences mean sometimes revenue reports are not as precise as we would like. For example, significant merger and acquisition activity may result in significant increases or decreases to a company’s thermal coal revenues.
While we continuously refine our processes, some of the known limitations of our compliance framework are:
- the coverage of the companies assessed by the external data provider
- the accuracy of information provided by reporting companies (potentially leading to estimations of revenue)
- the currency of the blacklist and data provided by the data provider.
We may choose to retain an interest in companies that have more than 10% of revenues associated with thermal coal mining but are well progressed in the sale or wind down of those mines (which would bring them in compliance with the restriction).
The thermal coal exclusion will not apply to existing unlisted investments.
Read more about our approach to climate risk and our investments in our Climate risk report (PDF, 2.3MB).
If you want to avoid investing in fossil fuel exploration and production, consider our sustainable and environmental investment options.
None of these options invest in fossil fuel exploration and production sectors, weapons, gambling, alcohol or tobacco.
See how we’re understanding and monitoring climate risks across our investments.
Learn how our members’ super is exposed to the risks and opportunities of climate change.
Read our policies and statements on responsible investment.
Access our responsible investing reports and how we exercise our proxy voting rights.
Podcasts: Responsible investing
Super Informed Radio is the podcast that unpacks the world of super, finance, and life’s money matters.
News and insights
We put our best foot forward when it comes to investing with a conscience, but what’s driven this? We take a look at the rise of responsible investing and how we're managing it.
In 2018 we signed on to Climate Action 100+. This is a 5-year investor-led initiative to ensure the world’s largest corporate greenhouse gas (GHG) emitters take critical action to align with the goals of the Paris Agreement.
While climate change is a global concern for us, a more local concern is the safety of the people who work for the companies we invest in. We talk to Bill McCallum, Managing Director of Hancock Natural Resources Group Australasia, about making a positive change to the lives of the people who work there.