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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 » Promoting responsible investment

Promoting responsible investment

SG 09. Collaborative organisations / initiatives

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

09.1. Select the collaborative organisation and/or initiatives of which your organisation is a member or in which it participated during the reporting year, and the role you played.

Select all that apply

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

USS is a founder signatory of the PRI and was actively involved in the development of the initiative and its governance from 2006. The scheme has held seats on the PRI Association Board and the Council of PRI. USS's 2017 activities include:

  • A Co-Head of the RI team participates in the PRI's Sustainable Financial System Advisory Group and sits on the Private Equity Advisory Committee.
  • A member of the RI team participated in the PRI engagement on cyber crime
  • A member of the RI team participates on the UN Sustainable Development Goals working group
  • A member of the RI team participates on the Private Equity Reporting and Monitoring working group
  • A member of the RI team facilitated a PRI workshop on ESG integration in listed equity and sits on the sub-committee.
  • Members of the RI team contributed to PRI publications on asset owner engagement  and spoke at the Blueprint for RI launch event.
  • The RI team hosted a secondee from PRI staff to share experience on implementing RI from the perspective of an asset owner with PRI staff.
  • Co-signed a statement marking the 4th anniversary of the Rana Plaza factory collapse expressing concerns regarding outstanding risks in the garment industry.

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

USS is a member of ACGA and an active regular participant on ACGA calls.

In 2017 USS participated in the ACGA study tour to China, engaging with stock exchanges, regulators and companies and attended an ACGA conference in India. 

USS also participated in the ACGA Korea Working Group during the year.

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

USS is an international member and supportive of the engagement objectives and market insight provided by ASCI.

USS participates in the Board Confidence Index, run by ACSI and Ownership Matters, which aggregates investor perspectives on the Boards of ASX 100 companies into various reports to be used by both Boards and investors. 

Whilst we did not present at an ACSI event in 2017, USS presented to ACSI members on its approach to RI in 2016 and will be presenting to ACSI members at their annual conference in May 2018.

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

The Head of USS's Private Markets Group sits on the LP Committee for the BVCA. USS was also in the past a founding member of the BVCA responsible investment committee. 

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

USS was a founder signatory to CDP and has participated in data requests since inception. The scheme renewed its commitment to CDP in 2017 in response to their review of the subscription process.

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

The Head of Equities chairs the CFA Asset Owners Council in the UK. 

USS has supported closer collaboration between the CFA and the PRI through the scheme's active participation in the PRI Equities ESG Integration Sub-Committee (highlighted above). Engagement with the CFA and enhancing the integration of ESG considerations into the CFA syllabus formed a core objective for the PRI sub-committee objectives during the year.

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

USS attends CII conferences and participates in various regulatory initiatives as appropriate.

In 2017 a Co-Head of RI participated in a panel on the challenges of undertaking global stewardship and engagement.

The scheme also contributed to an article for the CII on Dutch Governance and Akzo Nobel.

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

USS participates in the Investment Committee meetings by teleconference, and worked closely with Eumedion on matters relating to shareholder rights in the Netherlands and particularly with regard to Akzo Nobel in 2017. 

USS also participated in the joint delegation with Eumedion and ICGN to address concerns regarding shareholder rights with the Dutch Ministry of Economic Affairs during the year.

 

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

USS is an institutional investor stakeholder of EITI

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

A member of the RI team was elected Vice Chair of GIGN in 2017, commencing the post in January 2018. 

USS regularly participates on the GIGN international conference calls and supports the group through hosting the teleconferencing facility. 

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

USS was a founding partner and helped to establish GRESB - the first global benchmark on real estate - in 2009 in collaboration with other international pension funds and Maastricht University. In 2017, having joined GRESB Infrastructure, the scheme adopted use of the GRESB Infrastructure module for monitoring its direct infrastructure assets.

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

USS founded IIGCC in 2001 and has played a significant role in its ongoing operation and development. The scheme provides an advisor to the IIGCC’s board, and actively participates in IIGCC's Policy and Property workstreams. The scheme supports the IIGCC Property Workstream and IPF Sustainability Interest Group through its steering committee representation, and active membership of both groups. Through IIGCC, USS has a good relationship with the INCR, CERES and the IGCC (we are not members and have therefore not ticked the boxes below).

In 2017 USS signed up to a letter to governments of the G7 and G20 nations reiterating support already conveyed by investors for the Paris Agreement, and further calling on governments to continue to support and fully implement the Agreement. This letter was drafted by PRI in collaboration with CDP, Ceres, AIGCC, IIGCC, and IGCC. It built on the 2016 global investor statement on climate change which was supported by 130 investors with more than $13 trillion in AUM, including USS.

USS also signed up to the Climate Action 100+ initiative in 2017 which identifies priority engagement companies on climate change risk.

Additionally, the scheme continued to support the Transition Pathway Initiative (TPI) during the year.

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

Team members presented and attended several ICGN conferences during the year. A Co-Head of the RI Team presented on stewardship and culture.

 
          UKSIF

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

A member of the RI team is a member of the UKSIF Analysts Committee. The Analyst Committee contributes analysts' views on UKSIF strategy and policy.

 
          International Centre for Pensions Management (ICPM)

Your organisation’s role in the initiative during the reporting year (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

A Co-Head of the RI is a board member for ICPM. ICPM provides a forum for senior pension fund staff to exchange ideas and views on pensions management and investment issues, including responsible investment.

 
          Investment Property Forum (IPF), Sustainability Interest Group

Your organisation’s role in the initiative during the reporting year (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

USS is an active participant and Steering Group member of the IPF (Investment Property Forum) Sustainability Interest Group (SIG).

In 2017 the Sustainability Manager contributed towards the Minimum Energy Efficiency Standards (MEES) government consultation with the IPF SIG.

 
          Tomorrow's Company, Conference Board, Investor Forum

Your organisation’s role in the initiative during the reporting year (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

Tomorrows Company - USS is a member of the Tomorrow's Company Stewardship Forum - which is designed to improvement stewardship throughout the investment chain.

Conference Board - a Co-Head of the RI team was appointed Co-Chair of the European Governance Council in 2017.

Investor Forum - The Chair of the Board of USS Investment Management sits on the board of the UK's Investor Forum which seeks to enhance stewardship and engagement between UK institutional investors and companies. 

In 2017, USS participated in a project on human capital and supply chain management for several high profile UK companies in the apparel sector, attending site visits and meeting the Gangmasters and Labour Abuse Authority.

The scheme also contributed to, and participated in, the Investor Forum's engagements on succession and strategy at several companies during the year, including Rio Tinto and Shire.

 

 
          Pensions & Lifetime Savings Association (formerly the NAPF), Workforce Disclosure Initiative, Investment Association

Your organisation’s role in the initiative during the reporting year (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

PLSA - USS's CEO sits on the DB Council; the Head of Equities sits on the Asset Owners Committee; Head of Pensions Strategy and Insight sits on the DC Council and; a Co-Head of RI sits on the Stewardship Advisory Group at the Pensions and Lifetime Savings Association. In 2017 USS contributed to the PLSA Roundtable on Corporate Reporting on employment models and working practices and issued a statement supporting the initiative.

Workforce Disclosure Initiative – USS became a signatory to the WDI (run by ShareAction) in 2017. The WDI wrote to 76 companies with detailed question on human capital management for workforce and supply chain. USS had input to the proposed questions and attended a roundtable presenting the findings of the responses from the initial survey.

Investment Association - a Co-Head of RI sits on the Stewardship and Governance Committee through which we participated in a number of joint meetings with organisation such as the FCA on issues such as the listing rules in 2017.

Other - There are additional industry bodies / collaborations we could report, but we lack space. We have sought to mention other activities in other questions.

SG 09.2. Assets managed by PRI signatories

Indicate approximately what percentage (+/- 5%) of your externally managed assets are managed by PRI signatories.

60 %

SG 10. Promoting RI independently

10.1. Indicate if your organisation promotes responsible investment, independently of collaborative initiatives.

10.2. Indicate the actions your organisation has taken to promote responsible investment independently of collaborative initiatives. Provide a description of your role in contributing to the objectives of the selected action and the typical frequency of your participation/contribution.

Description 

          A Co-Head of the RI team co-chaired a session on responsible investing at a discussion forum for the International Centre for Pension Management (ICPM) during the year.

An improved energy meter monitoring training programme was delivered by the USS Sustainability Manager to the scheme’s Property Managers, Building Managers and Centre Managers during 2017.  This sought to share best practice amongst USS’s portfolio assets and encourage those involved to better utilise the data available to deliver better energy efficiency. 

Also, please see examples under SAM 5.3 where we outline some of the activities the fund has undertaken during the year to share developing best practice on RI amongst peer asset owners, institutional investors and other stakeholders.

Frequency of contribution

Description 

          In 2017 USS participated in the PRI's monitoring and reporting in private equity working group, which is providing guidance and examples of best practice disclosure in private equity.

Additionally, USS prompted enhancements to the waste, water and energy performance reports produced by the scheme’s sustainability consultants to enhanced transparency and assist the scheme’s Property Managers, Building Managers and Centre Managers in interpreting how USS’s assets are performing.

The scheme also participates in many initiatives promoting disclosure - such as CDP, the Transition Pathway Initiative and reflects this commitment within its own policies and consultation responses. For example, USS's Voting Policy, Global Stewardship Principles and Stewardship Code Statements outline USS's expectations from companies to provide ESG data and clear disclosure to markets.

USS regularly calls for enhanced transparency and reporting on corporate governance matters from investee companies in the engagement letters we send related to our voting activities in public equities.

Further, USS has fully disclosed its global voting records for many years and has worked with its custodian to promote transparency of USS's shareholdings to global markets.

Frequency of contribution

Description 

          USS shared its experience on RI practices at many fora. For example, a member of the team attended the 3rd Global Asset Owners' Forum, a set of meetings hosted by Japan’s GPIF, the world’s largest pension fund - a forum for asset owners to discuss ESG integration and management of climate change.

A co-head of the RI team was interviewed by S&P on carbon footprinting - see
https://www.uss.co.uk/how-uss-is-run/views-from-uss/carbon-footprinting.

A Co-Head of the RI team spoke at a CII conference on the challenges of undertaking global stewardship and engagement.

Further examples are outlined in SG9 and throughout this report.

Frequency of contribution

Description 

          USS regularly published materials on RI matters for both internal and external audiences. For example, RI issues were discussed in several research papers discussed at the 2017 Investment Committee away day, and RI and carbon footprinting were amongst the first topics to be published on the scheme's recently launched Views from USS -  https://www.uss.co.uk/how-uss-is-run/views-from-uss. 
The RI team also provides interviews and inputs to academic research on responsible investment. For example, in 2017 a member of the RI team gave a presentation on evaluating sustainability to a group of MSc students at Nottingham University's International Centre for CSR.
Other publications on specific asset classes or processes are discussed throughout our transparency report.

Frequency of contribution

Description 

          USS takes a very high profile in RI and participates in events, contributes to articles and many other things that raise the profile of RI and ESG for companies other investors and policymakers in the UK and globally.  This includes participating in PRI events.  

We ask all external asset managers about their membership and views on PRI, and a significant proposition of USS’s external mangers are signatories to the PRI.  However, we have not tracked this centrally so the 60% figure in SG9 is an estimate: we do not believe that it is a valuable use of scarce RI resources to chase down these data.

Frequency of contribution

Description 

          USS has contributed to a number of consultations in the UK and overseas related to RI during the year, including:

- USS participated in a number of meetings with BEIS, facilitated by the Investment Association, to discuss the government’s consultation on Corporate Governance reform. USS responded to the Green paper on Corporate Governance in February 2017. USS’s response covered listed and private companies. It encouraged the Government to ensure the UK’s corporate governance framework continues to promote international best practice and accountability to stakeholders. https://www.uss.co.uk/~/media/document-libraries/uss/investments/corporate-governance/uss-submission-to-beis-consultation-on-corporate-governance-reform--fin.pdf 

The RI team responded to a consultation on the Financial Stability Boards’ Task Force on Climate-related Financial Disclosure (TCFD) recommendations in response of the threat that they believe climate change poses to financial markets. 

USS has also responded to the FCA’s Discussion Paper on the availability of information in the UK Equity IPO process and the FCA’s Asset Management Market Study. We welcomed the FCA’s recommendation to refer the Investment Consultant industry to the CMC and their drive for in-creased transparency on costs.  

USS co-submitted a consultation response regarding the proposed amendments to the German Corporate Governance Code 2017

The scheme provided a response to a Japanese consultation on proposed changes to disclosure of corporate in-formation by the Financial System Council’s Working Group on Corporate Disclosure.

USS submitted a response to the FCA’s consultation on the proposal to create a new premium listing category for sovereign controlled companies. In our submission, we outlined our opposition to the proposals as key investor protections would be removed in order to attract these listings into the UK.

USS submitted a response to the BEIS’s National Security and Infrastructure Investment review with our submission focussing on the government’s proposed long-term reforms to their oversight of foreign investment on security grounds. 

USS also provided a response to the EC Public consultation on institutional investors and asset managers' duties regarding sustainability. https://ec.europa.eu/eusurvey/publication/investors-duties-sustainability-2017

In May 2017 USS raised concerns over proposals in the Netherlands to introduce protectionist measures at Dutch companies. We co-signed a letter convened by the International Corporate Governance Network (ICGN) and joined an investor Delegation to the Ministry of Economic Affairs in the Hague where we had the opportunity to reiterate the points we made in the letter. https://www.icgn.org/sites/default/files/9.%20ICGN%20Letter%20Dutch%20anti%20takeover%20bill%20May%202017_1.pdf 

USS also sent letters to members of the US House of Representatives in May 2017, to raise concerns over several provisions within the proposed Financial Choice Act which would make US companies less accountable to investors and restrict shareholder rights. The scheme supported a letter from the US Council for Institutional Investors outlining investor concerns. http://www.cii.org/choice_act_press_release.

USS contributed towards the Minimum Energy Efficiency Standards (MEES) government consultation with the IPF (Investment Property Forum).

Frequency of contribution

Description 

          Examples of activities across the different asset classes in 2017 include:
- Private Equity Engagement: Post-Investment Monitoring Is Critical https://www.blackrock.com/corporate/literature/publication/blk-ceres-engagementguide2015.pdf  
-LP Perspectives USS as an RI https://www.privateequityinternational.com/product/value-creation-responsible-investment/  
- A Practical Guide to Active Ownership in Listed Equity - USS contributed to the report and is profiled.
- USS was interviewed for the PRI’s Private Equity Reporting and Monitoring forthcoming report

Frequency of contribution

Description 

          •	A Co-Head of the RI team participates in the PRI's Sustainable Financial System Advisory Group and sits on the Private Equity Advisory Committee.
•	A member of the RI team participated in the PRI collaborative engagement on cyber crime
•	A member of the RI team participates on the UN Sustainable Development Goals working group
•	A member of the RI team participates on the Private Equity Reporting and Monitoring working group
•	A member of the RI team facilitated a PRI workshop on ESG integration in listed equity and sits on the sub-committee.

Frequency of contribution

Description 

          Representatives of USS Investment Management sit on:
Investment Association - Corporate Governance Engagement Committee
International Centre for Pensions Management -Board member 
FTSE Environmental Markets Advisory Committee - Committee member
Standards Board for Alternative Investments trustee
Pensions & Lifetime Savings Association Asset Owners Committee
Investment Property Forum - Sustainability Interest Group
IIGCC - Property Working Group

Further examples are provided in the response to SG9.

Frequency of contribution

10.3. Describe any additional actions and initiatives that your organisation has taken part in during the reporting year to promote responsible investment [Optional]

USS takes a broad and long term view of stewardship, engaging with companies, policy makers and other investors in order to improve the management of environmental, social and governance issues and protect shareholder rights to generate more sustainable long term returns for the scheme and its members.

The scheme regularly responds (collaboratively and independently) to consultations and engages with regulators and public policy makers to articulate the voice of pension funds, asset owners and long-term institutional investors. Examples of our public policy consultation responses and meetings are provided above.

Representatives of the scheme also present on RI at industry events and contribute to publications to encourage the adoption of RI and the development of the tools required to implement RI across different asset classes and markets in which the fund invests.

 

SG 11. Dialogue with public policy makers or standard setters

11.1. Indicate if your organisation - individually or in collaboration with others - conducted dialogue with public policy makers or regulators in support of responsible investment in the reporting year.

11.2. Select the methods you have used.

11.3. Where you have made written submissions (individually or collaboratively) to governments and regulatory authorities, indicate if these are publicly available.

provide URL http://www.cii.org/files/issues_and_advocacy/correspondence/2017/Apr%2024%20Letter%20Committee%20on%20Financial%20Services_FINAL.pdf
provide URL https://ec.europa.eu/eusurvey/publication/investors-duties-sustainability-2017
provide URL https://www.uss.co.uk/~/media/document-libraries/uss/investments/corporate-governance/uss-submission-to-beis-consultation-on-corporate-governance-reform--fin.pdf

11.4. Provide a brief description of the main topics your organisation has engaged with public policy-makers or regulators on.

Please see response in SG 10.
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