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Universities Superannuation Scheme - USS

PRI reporting framework 2018

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Organisational Overview
Basic information [OO 01 - 09] Asset class implementation gateway indicators [OO 10 - 12] Peering questions [OO LE 01 - INF 03]
Strategy and Governance
Investment policy [SG 01 - 04] Objectives and strategies [SG 05 - 06] Governance and human resources [SG 07 - 08] Promoting responsible investment [SG 09 - 11] Outsourcing to fiduciary managers and investment consultants [SG 12] ESG issues in asset allocation [SG 13 - 15] Asset class implementation not reported in other modules [SG 16 - 17] Innovation [SG 18] Communication [SG 19]
Indirect – Manager Selection, Appointment and Monitoring
Listed Equity and Fixed Income Strategies [SAM 01] Selection [SAM 02 - 03] Appointment [SAM 04] Monitoring [SAM 05 - 07] Outputs and outcomes [SAM 08 - 09]
Direct - Listed Equity Incorporation
ESG incorporation in actively managed listed equities [LEI 01 - 10] Implementation processes [LEI 01 - 10] (B) Implementation: Thematic [LEI 07] (C) Implementation: Integration of ESG issues [LEI 08 - 10] Outputs and outcomes [LEI 12 - 14]
Direct - Listed Equity Active Ownership
Engagement [LEA 01 - 14] 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 - 14] (Proxy) voting and shareholder resolutions [LEA 15 - 24] Overview [LEA 15] Process [LEA 16 - 20] Outputs and outcomes [LEA 21 - 24]
Direct - Fixed Income
ESG incorporation in actively managed fixed income [FI 01 - 13] Implementation processes [FI 01 - 03] (C) Implementation: Integration [FI 11 - 13] ESG incorporation in passively managed fixed income [FI 14] Fixed income - Engagement [FI 15 - 17] Outputs and outcomes [FI 18 - 19]
Direct – Private Equity
Overview [PE 01 - 02] Pre-investment (selection) [PE 05 - 08] Post-investment (monitoring) [PE 09 - 13] Outputs and outcomes [PE 14 - 15]
Direct - Property
Overview [PR 01] Pre-investment (selection) [PR 04 - 06] Selection, appointment and monitoring third-party property managers [PR 07] Post-investment (monitoring and active ownership) [PR 08 - 14] Overview [PR 08] Property monitoring and management [PR 09 - 10] Property developments and major renovations [PR 11] Occupier engagement [PR 12 - 13] Community engagement [PR 14] Outputs and outcomes [PR 15 - 16]
Direct - Infrastructure
Overview [INF 01 - 02] Pre-investment (selection) [INF 05 - 09] Selection, appointment and monitoring of third-party operators [INF 10] Post-investment (monitoring and active ownership) [INF 11 - 16] Overview [INF 11] Infrastructure monitoring and operations [INF 12 - 14] Infrastructure maintenance [INF 15] Stakeholder engagement [INF 16] Outputs and outcomes [INF 17 - 18]
Assurance
Assurance [CM1 01.1 - 01.7]
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You are in Strategy and Governance » Outsourcing to fiduciary managers and investment consultants

Outsourcing to fiduciary managers and investment consultants

SG 12. Role of investment consultants/fiduciary managers

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

12.1. Indicate whether your organisation uses investment consultants.

12.2. Indicate how your organisation uses investment consultants in the selection, appointment and/or monitoring of external managers.

Asset class

12.3. Indicate if your organisation considers responsible investment in the selection, appointment and/or review processes for investment consultants.

Asset class

12.3. Indicate if your organisation considers responsible investment in the selection, appointment and/or review processes for investment consultants.

12.4. Indicate whether you use investment consultants for any the following services. Describe the responsible investment components of these services.

Describe how responsible investment is incorporated 

          We do not outsource decision making to investment consultants or have formal selection processes for consultants. However, we may use consultants' on an ad hoc basis to consider their opinions, resources and insights to help inform debate within USS's internal investment teams. For example, consultants' perspectives may feed into the identification of service providers or best practice ideas from across the market.

Describe how responsible investment is incorporated 

          For the indirect property investments USS's in-house team use the support of an investment advisor to monitor international funds.

Describe how responsible investment is incorporated 

          Investment consultants' research helped to inform the delivery of the USS Investment Builder - the new defined contribution (DC) section of the scheme. Discussions were held with more than one investment consultancy firm to collect inputs on a variety of matters. These helped the scheme's internal Strategy Coordination (StratCo) team to identify the most appropriate options and best delivery solutions for the new DC offerings, including USS's ethical and Sharia-compliant funds, the Ethical Lifestyle strategy.
However, all investment mandates, product development, implementation and fund manager selection is undertaken in-house.

Describe how responsible investment is incorporated 

          For the directly held property assets USS use an external sustainability consultant to assist the scheme in monitoring and reporting on its ESG performance.

12.7. Additional information [Optional].

USS acknowledges the significant influence consultants have over smaller schemes who depend heavily on their advice and input into asset management selection and oversight. The scheme has worked on RI projects with investment consultants in the past and continues to engage with the consultant market at industry events and through the scheme's investment and advisory activities.

During the year, USS fed into discussions about responsible investment and the role of investment consultants at several fora, such as the PRI's Policy Advisory Committee and UK Pension Funds Roundtable events. Discussions noted a need for research and innovation from consultants on RI, a knowledge gap on RI between consultants' spokespersons and field consultants and the lack of tools for consultants advising on custodian appointments to assess performance on global proxy voting.

USS contributed to discussions with the PRI's Policy Advisory Committee and Sustainable Financial System's Advisory Group (which USS participated in) on the role of consultants: these helped inform the publication of the PRI's Investment Consultants Services Review in December 2017 - see https://www.unpri.org/sustainable-financial-system/investment-consultants-services-review/571.article. Both the PRI and UK Pension Fund Roundtable are continuing their focus on investment consultants in 2018. USS will continue to participate in these initiatives.

The scheme is also conscious of the potential conflicts inherent in the current investment advice market which has become more apparent as investment consultants have moved into fiduciary management services.  With this in mind, USS welcomed the Financial Conduct Authority's proposed market review of the institutional investment advice industry, responding to the FCA's Asset Manager Market Study in February 2017.
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