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Universities Superannuation Scheme - USS

PRI reporting framework 2018

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Post-investment (monitoring and active ownership)

Overview

INF 11. ESG issues in post-investment activities

11.1. Indicate whether your organisation and/or operators consider ESG issues in post-investment activities relating to your infrastructure assets.

11.2. Indicate how your organisation, and/or operators, considers ESG issues in the following post-investment activities relating to your infrastructure assets.

11.3. Describe how your organisation, and/or operators, considers ESG issues in post-investment activities related to your infrastructure investments. [Optional]

USS has secured board positions at most investee infrastructure assets. Through participation on the board, where appropriate the scheme receives regular updates on the financial performance, risks and ESG activities at investee assets. Information may be received informally via discussions and emails, and formally through board papers and board meetings. Board meetings tend to be held on at least a quarterly basis.

The board will consider strategy, implementation, risk management and alignment of executives. In doing so, USS staff receive reports from management and/or external sources on ESG issues such as remuneration, environmental management and performance, health and safety performance, union relations, human resources, internal controls, regulatory and other stakeholder issues and governance structures.

Environmental and social issues are frequently a standing issue at board meetings for infrastructure assets. A number of the scheme's infrastructure assets are ISO 14001 and ISO 18001 certified providing externally verified frameworks for the management of environmental and health and safety risks respectively.  Adherence to standards on ESG related issues may also form part of the terms for the concession agreement with the board overseeing the establishment of KPI's and targets relating to ESG issues where appropriate.

The investment and RI teams also participate in on-site visits to monitor investee assets, meet management and deliver oversight to executives post-investment. For example, as noted above, members of the RI team and the Property team's sustainability manager have visited several of the scheme's infrastructure assets to discuss ESG matters with management. These reviews cover matters such as pollution control, energy efficiency, the impacts of climate change regulations and human capital management.

Additionally, one of the scheme's infrastructure investments was the first asset to be reviewed under the more systematic ESG monitoring review process introduced in 2017 with findings discussed at the Private Markets Group, Portfolio Review Committee (PRC) meetings. The process is outlined in INF01 with the case study outlined in INF18.


Infrastructure monitoring and operations

INF 12. Proportion of assets with ESG performance targets

12.1. Indicate the proportion of infrastructure assets for which your organisation and/or operators included ESG performance in investment monitoring during the reporting year.

 (in terms of number of infrastructure assets)

12.2. Indicate ESG issues for which your organisation, and/or operators, typically sets and monitors targets (KPIs or similar) and provide examples per issue.

List up to three example targets per issue

          Pollution incidents
        
          Energy efficiency
        
          Water use
        

List up to three example targets per issue

          Community relations
        
          Human capital management
        
          Health and safety
        

List up to three example targets per issue

          Internal controls and compliance
        
          Board reporting
        
          Shareholder rights (in line with the shareholder agreements)
        

12.3. Additional information. [Optional]

In 2017, the scheme became a member of the GRESB Infrastructure group. GRESB provides a detailed questionnaire and assessment process on ESG management for infrastructure assets. The tool will help USS and the operators to benchmark and track ESG related obligations and targets exist at individual asset level and to prioritise developments as appropriate. A significant proportion of USS’s infrastructure assets have completed the GRESB process in previous years, and the scheme is proposing to roll it out to other assets where it is advantageous to do so (some assets will not fit the GRESB model).  

The results of the assessment should also enable us to answer INF 13.1 in future years.

GRESB Infrastructure Questionnaire (2016)

http://gresb-public.s3.amazonaws.com/2016/content/2016-GRESB-Infra-Asset-Assessment.pdf

Management

MA1: Does the entity specifically address ESG issues in its long-term strategic plan(s)?

MA2: Does the entity have a senior decision-maker accountable for ESG issues?

MA3: Are ESG factors included in performance targets for the entity’s senior leadership?

MA4: Does the entity provide ESG-related training?

 

Policy & Disclosure

PD1: Has the entity formally adopted a policy or policies on environmental issues?

PD2: Has the entity formally adopted a policy or policies on social issues?

PD3: Has the entity formally adopted a policy or policies on governance issues?

PD4: Does the entity have a process for stakeholders to communicate grievances?

PD5: Does the entity have third-party review of its ESG reporting and/or data?

PD6: Did the entity publish formal impact assessments during the last 3 years?

PD7: Does the entity communicate its ESG activities?

PD8: Does the entity have a process to communicate about ESG-related misconduct or penalties?

 

Risks & Opportunities

RO1: Does the entity assess and mitigate risks associated with environmental issues?

RO2: Does the entity assess and mitigate risks associated with social issues?

RO3: Does the entity assess and mitigate risks associated with governance issues?

 

Implementation

IM1: Can the entity provide specific examples of actions taken to improve ESG management and performance?

 

Monitoring & EMS

ME1: Does the entity have an Environmental Management System or comparable framework?

ME2: Does the entity collect and manage ESG performance data?

Stakeholder Engagement

SE1: Does the entity have a stakeholder engagement program?

SE2: Can the entity describe specific examples of actions taken to implement its stakeholder engagement program?

 

Performance Indicators

PI1: Can the entity report on measures of output?

PI2: Can the entity report on health and safety performance over time?

PI3: Can the entity report on energy generated and purchased over time?

PI4: Can the entity report on greenhouse gas emissions over time?

PI5: Can the entity report on air pollutant emissions over time?

PI6: Can the entity report on water use over time?

PI7: Can the entity report on waste generation and disposal over time?

PI8: Can the entity report on biodiversity and habitat over time?

 

Certifications & Awards

CA1: Did the entity maintain or achieve entity-level certifications for ESG-related management and/or performance?

CA2: Did the entity maintain or achieve project-level certifications for ESG-related management and/or performance?

CA3: Did the entity receive awards for ESG-related actions, performance, or achievements?

CA4: Was the entity the subject of case studies, research, or similar publications describing its ESG management and/or performance?


INF 13. Proportion of portfolio companies with ESG/sustainability policy

13.1. Indicate whether you track the proportion of your infrastructure investees that have an ESG/sustainability-related policy (or similar guidelines).

13.2. Indicate the proportion of your infrastructure investees that have an ESG/sustainability-related policy (or similar guidelines).

(in terms of number of infrastructure investees)

13.3. Describe how your organisation, and/or your operators, contribute to the infrastructure investees’ management of ESG issues. [Optional]

Please see our responses to the previous INF questions.


INF 14. Type and frequency of reports received from investees

14.1. Indicate the type and frequency of reports you request and/or receive from infrastructure investees covering ESG issues.

Type of Reporting

Typical reporting frequency

Typical reporting frequency

14.2. Additional information.

USS will request environmental and related policies and management process information as part of due diligence to assess the level of CSR management at assets prior to investment.  The vast majority of USS’s Infrastructure assets have such policies and detailed CSR strategies in place.  This includes certification to ISO14001 and others in many cases.

As noted, environmental and social issues are frequently covered in board papers, and USS will have these via board positions on its direct infrastructure assets.

In addition, many of the assets will also produce separate freestanding and publically available sustainability reports or cover sustainability and community matters on their websites. Examples of these are provided in INF 16.2 below. 

From 2017, the GRESB Infrastructure survey responses will help to capture the scheme's infrastructure assets' reporting and data collection on ESG matters in a more systematic format.

 


Infrastructure maintenance

INF 15. Proportion of maintenance projects where ESG issues were considered

15.1. Indicate the proportion of active infrastructure maintenance projects where ESG issues have been considered.

(in terms of number of active maintenance projects)

15.2. Describe your approach to ESG considerations for infrastructure maintenance projects. [Optional]

We would expect ESG matters to be reviewed in most, if not all, maintenance projects. However, this is the type of data that we expect to be collated and managed by the operational managers of the asset. It is good management practice to undertake preventative maintenance and maintenance will frequently include aspects that will have an ESG focus. Certified management systems such as ISOO 14001 encourage such inclusion of CSR maters in maintenance programmes.  Finally, good management practice, which we expect from our infrastructure assets, dictates that preventative maintenance is better for managing risks (including ESG risks) than reactive maintenance.  


Stakeholder engagement

INF 16. Proportion of stakeholders that were engaged with on ESG issues

16.1. Indicate which stakeholders your organisation, and/or operators, engaged with on ESG issues in relation to your infrastructure assets during the reporting year and what proportion of your investments they apply to.

Stakeholders engaged

Percentage of infrastructure assets these apply to

 (in terms of number of infrastructure assets)

Percentage of infrastructure assets these apply to

 (in terms of number of infrastructure assets)

          Employees
        

Percentage of infrastructure assets these apply to

 (in terms of number of infrastructure assets)

16.2. Describe your approach to stakeholder engagements in relation to your infrastructure assets.

Where appropriate USS engages directly with stakeholders, in particular regulators where the asset is part of a regulated industry. 

More often however, stakeholder engagement will be conducted by the executive team operating the asset: given the nature of infrastructure assets, such engagement is very common and generally will be co-ordinated by the asset operator. Such engagement may be reported via websites or stand-alone CSR and sustainability reports.

For example see:


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