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Local Government Superannuation Scheme

PRI reporting framework 2017

Basic Information [OO 01 - 09] Gateway asset class implementation indicators [OO 10 - 12]

Objectives and strategies [SG 05 - 06] Governance and human resources [SG 07 - 08] Promoting responsible investment [SG 09 - 11] Implementation not in other modules [SG 12 - 16] Innovation [SG 17]

Direct - Listed Equity Active Ownership

Engagement [LEA 01 - 16] Overview [LEA 01 - 02] Process [LEA 03 - 10] Process for engagements run internally [LEA 03 - 04] Process for engagements conducted via collaborations [LEA 05 - 06] Process for engagements conducted with/on your behalf by service providers [LEA 07 - 08] General processes for all three groups of engagers [LEA 09 - 10] Outputs and outcomes [LEA 11 - 15] Communication [LEA 16]

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Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

Yes

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types	Coverage by AUM
Policy setting out your overall approach Formalised guidelines on environmental factors Formalised guidelines on social factors Formalised guidelines on corporate governance factors Asset class-specific RI guidelines Sector specific RI guidelines Screening / exclusions policy Engagement policy (Proxy) voting policy Other, specify (1) Other, specify(2)

01.4. Indicate what norms you have used to develop your investment policy that covers your responsible investment approach.

UN Global Compact Principles

UN Guiding Principles on Business and Human Rights

Universal Declaration of Human Rights

International Bill of Human Rights

International Labour Organization Conventions

United Nations Convention Against Corruption

OECD Guidelines for Multinational Enterprises

Other, specify (1)

Other, specify (2)

Other, specify (3)

None of the above

01.6. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

LGS has a Sustainable & Responsible Investment Policy, located on the website at https://www.lgsuper.com.au/assets/Documents/LGS-Sustainable-and-Responsible-Invest-Policy.pdf, and last updated on 1/5/2015.

This Sustainable and Responsible Investment Policy (‘The Policy’) recognises that LGS is long term in nature, and that the long term prosperity of the economy and the wellbeing of members depends on a healthy environment, social cohesion and good governance of LGS and the companies in which it invests.

As a universal investor with index holdings, LGS has an interest in all major companies in Australia and internationally. This Policy sets down the sustainability principles by which LGS will be managed, and the requirements for all investments made by LGS. It covers the total investment portfolio, with specific policies for public and private equity investments and direct property. The Policy includes the list of collective engagement initiatives that LGS will participate in, and the ESG risk assessment that will be required of LGS’s asset consultant and investment managers.

SG 02. Publicly available RI policy or guidance documents

URL https://www.lgsuper.com.au/assets/Documents/LGS-Sustainable-and-Responsible-Invest-Policy.pdf

Attachment (will be made public)

We do not publicly disclose our investment policy documents

02.4. Additional information [Optional].

SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

Yes

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

The Trustee Board has ultimate responsibility for the oversight of conflicts management and adopts a comprehensive approach to managing situations where a conflict may arise. The same approach is applied throughout the organisation. The Trustee retains overall responsibility for ensuring that arrangements, policies and processes for managing and monitoring conflicts are in place and Responsible Persons understand their obligations.

The policy has identified a three stage approach as outlined below:

Identify the conflict – what are potential or actual conflicts, and how they may arise in the Trustee’s normal business operations.
Manage and assess the conflict – in accordance with the principles in this policy.
Disclose the conflict – in accordance with the principles in this policy, including detailed registers. In some cases, conflicts may arise between different classes or types of Scheme members or beneficiaries.

This Conflicts of Management Framework requires that all members and beneficiaries be treated equitably. Conflicts are not limited to financial matters and care is taken to protect confidential information.

03.3. Additional information. [Optional]

SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within portfolio companies.

Yes

04.2. Describe your process on managing incidents

          Incidents require a review by internal Sustainability staff as well as Chief Investment Officer.  The appropriate fund manager would then be called upon to explain how this incident was being dealt with e.g. divestment, management out of asset or otherwise.  Questioning would relate to how the incident could be avoided in the future and how the relevant fund manager was building this process into asset assessment.

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