This report shows public data only. Is this your organisation? If so, login here to view your full report.

Local Government Superannuation Scheme

PRI reporting framework 2017

You are in Strategy and Governance » Governance and human resources

Governance and human resources

SG 07. RI roles and responsibilities

07.1.

Roles present in your organisation

          Head of Sustainability
        
          Sustainability Officer
        

Other description (1)

07.2. For the roles for which you have RI oversight/accountability or implementation responsibilities, indicate how you execute these responsibilities.

We apply our RI strategies across various asset classes through:

  • Board level oversight of ESG/RI
  • ESG/RI report and recommendations included in every meeting of the Investment Committee (IC)
  • SRI Policy referenced in Investment Policy Statement
  • Provide direction to asset consultants on LGS SRI Policy
  • Integrate RI considerations into the selection of the manager - assess ESG capabilities, experience and provide recommendations to the IC on this basis
  • Engage with the manager on RI concerns prior to signing of the Investment Management Agreement  (IMA).
  • Include RI reporting requirements into IMA’s.
  • Engage with the manager on RI concerns throughout the life of the investment.

The process in place to manage our external managers in their delivery against our RI mandates includes:

  • Inclusion of RI reporting requirements into IMA’s
  • Reporting includes monthly holding reports
  • Quarterly RI reporting – ESG issues within holdings and engagement conducted on our behalf.
  • Quarterly/six monthly meetings where ESG issues are discussed.
  • Ad hoc communication about ESG issues as they arise.
  • Issuance of 6 monthly exclusions list.

The process in place for internally managed assets includes:

  • SRI overlay – Following the generation of the LGS exclusions list, a list of top ESG rated and poor ESG rated companies is generated for the LGS Portfolio Manager to take out short and long positions in certain stocks. Performance of this internally managed mandate is monitored quarterly by the Investment Committee, with the company list reviewed on a 6 monthly basis.
  • Direct property – LGS owns eight ‘green’ properties which it manages directly (with a strong focus on sustainability). These properties are rated 6 star NABERS Energy (with 100% GreenPower) and average 3.77 star NABERS water. LGS has two full time employees responsible for managing the property portfolio, including the integration of sustainability into the operation and maintenance of buildings. LGS has an Environmental Sustainability Policy for Direct Property that provides direction for activities in this area.

To ensure we can identify, assess and notify material changes in investment characteristics we:

  • Subscribe to MSCI and Sustainalytics ESG research and purchase additional company research from ACSI and our proxy advisors CGI Glass Lewis. We also access ESG research on a range of issues from Citi, Credit Suisse and Morgan Stanley.We conduct regular reviews of portfolio holdings using the ESG ratings, metrics and activity information provided by these data providers.
  • Monitor news and current affairs.
  • Engage with fund managers as ESG issues arise.
  • Issuance of 6 monthly exclusions list.

Investment Committee:

  • The LGS Investment Committee consists of six people, four from the LGS Board and two external independents. Details of their qualifications and experience are available on the LGS website at https://www.lgsuper.com.au/about-us/board-and-executive-team/board-of-directors/ . The Investment Committee’s term of reference is an internal document but available upon request.
  • The LGS Investment Committee meet on a monthly basis to review LGS’ strategic asset allocation, investment mix and potential new investment opportunities.
  • A responsible investment report is prepared for each investment committee meeting. This report covers recent RI related activities and engagements that we have undertaken in addition to ESG reviews of potential new investment opportunities.
  • The Investment Committee are responsible for overseeing the implementation of the LGS SRI Policy, including any changes to the policy. Every six months, the LGS Sustainability Team conduct an extensive ESG review and submit a list of ASX listed companies for potential exclusion from the LGS investment universe – this covers our standard negative screens in addition to our ‘High ESG risk’ screen which allows us to exclude companies that are not performing well on ESG issues.

 

07.3. Indicate the number of dedicated responsible investment staff your organisation has.

2 Number

07.4. Additional information. [Optional]

The number of dedicated responsible investement staff quoted in answer 7.3 above refers to internal staff only.


SG 08. RI in performance management, reward and/or personal development

08.1. Indicate if your organisation’s performance management, reward and/or personal development processes have a responsible investment element.

Board members/Board of trustees

08.2. Describe any activities undertaken during the reporting year to develop and maintain Board members’ skills and knowledge in relation to responsible investment.

The Board level Investment Committee receives monthly sustainability reports that provide updates on LGS' RI program and industry developments. The Investment Committee also review RI assessments of ESG risks that are undertaken for all asset classes and new manager proposals.

Chief Executive Officer (CEO), Chief Investment Officer (CIO),  Investment Committee

Other C-level staff or head of department

          Head of Sustainability
        

Portfolio managers

Investment analysts

Dedicated responsible investment staff

Other role (1) [from SG 07]
          Sustainability Officer
        

08.3. Provide any additional information on your organisation’s performance management, reward and/or personal development processes in relation to responsible investment.

Note that LGS does not have a variable pay component to our compensation.

08.4. Describe the level of experience board members/trustees/chief-level staff have with incorporating ESG factors into investment decision-making processes.

          Board members/trustees/chief level staff receive regular updates on sustainability in the Investment Committee papers and also attend the Australian Council of Superannuation Investors (ACSI) conference as well as other relevant industry functions.  The importance of sustainability forms part of LGS' brand and features in Member Services Committee meetings.
        

Top