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Universities Superannuation Scheme - USS

PRI reporting framework 2019

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Outputs and outcomes

LEA 09. Number of companies engaged with, intensity of engagement and effort

Indicate the amount of your listed equities portfolio with which your organisation engaged during the reporting year.
Specify the basis on which this percentage is calculated

Number of companies engaged

(avoid double counting, see explanatory notes)

Proportion (to the nearest 5%)

Individual / Internal staff engagements

Collaborative engagements

Service provider engagements

09.5. Additional information. [Optional]

Please note that 9999 was entered into the boxes above as we were unable to enter NA.

We do not consider the number of company engagements to be an appropriate indicator of the quality of engagement. As a result we have no reason to collect those statistics.

USS manages the majority of its assets in house. Given the concentrated and active  nature of USS’s public equity portfolio, the proportion of companies we engage with will be higher than for typical pension funds which tend to have very large passive exposures. 

With regard to question LEA 11.3, whilst USS will regularly participate or lead on collaborative engagements e.g. with other peer international pension funds, we do not track the exact number or wish to report on it.

Please see our comments in LEA 10.2 (and many other sections in the PRI report) for examples of USS's stewardship activities in public equities and other asset classes.


LEA 10. Engagement methods

10.1. Indicate which of the following your engagement involved.

10.2. Additional information. [Optional]

We do not maintain statistics on the type of engagement undertaken.  However, we have participated in all of the engagement types described above and recognise the contribution that each approach can make. 


LEA 11. Examples of ESG engagements

11.1. Provide examples of the engagements that your organisation or your service provider carried out during the reporting year.

ESG factors
Governance
Conducted by
Objectives

To encourage the company to engage with a potential suitor over a proposed bid.

Scope and Process

USS, presented at Enterprise Chambers Court, proposed Supervisory Board candidate, participated in a joint delegation to the Finance Ministry.  USS also made public statement at both an AGM and an EGM. Meetings with the company were attended by a representative the RI Team and fund manager from the relevant desk.  Whilst this was an individual investment collaboration with other investors took place during the process.

Outcomes
ESG factors
Environment
Conducted by
Objectives

To understand the potential financial costs associated with the disaster and to get comfort that the company is delivering on the remediation work promised and that this work is beneficial to effected stakeholders in the locality.   It was also important to get comfort that the company had reviewed its processes and controls around tailings management and made enhancements where appropriate.

Scope and Process

Field trip to site of accident to speak to company representatives on the ground as well as impacted stakeholders including local communities.  Also to review progress of remediation work and future plans.   

Outcomes
ESG factors
Social
Conducted by
Objectives

To communicate to the firm our concerns around the number of fatalities they are experiencing and to understand why performance does not appear to be improving despite investment in processes and controls.  Ultimately USS wants to see far fewer accidents and far fewer fatalities.

Scope and Process

Focused engagement call specifically discussing Health & Safety performance to illustrate the significance of this issue to us as investors and to speak directly to those responsible for managing Health & Safety at the firm (IR, H&S Officer and Sustainability team).     The portfolio manager also played a full role in the call which helped to emphasise the financial materiality of the issue.   We also raised concerns in the engagement letter we sent to the Chairman after the AGM. 

Outcomes
ESG factors
Environment
Conducted by
Objectives

The company is a heavy user of coal in its power generation.  USS needed to understand how the company was assessing the risk of stranded assets and the transition to a lower carbon economy.

Scope and Process

Company visit to Japan with other investors and one to one meeting with the company in the UK with the portfolio manager present.

Outcomes
ESG factors
Governance
Conducted by
Objectives

To convey to the firm our concerns around corporate governance, human capital management and commitments to change.

Scope and Process

Direct engagement with the company with portfolio manager and RI team in attendance

Outcomes
ESG factors
Conducted by
Objectives

Influence structure and metrics to align executives' reward to the creation of shareholder value,  to the extent possible given regulatory restrictions in the banking sector

Scope and Process

Several face to face meetings over six months with Chair of the Remuneration Committee and relevant executives; several email / phone call exchanges

Outcomes
ESG factors
Social
Conducted by
Objectives

To understand

  • The company's exposure to viscose in their supply chain
  • The environmental and social risks associated with un-sustainable viscose production. 
  • The potential supply chain impact if viscose supply was disrupted.  
Scope and Process

Research followed by face to face meeting with the firm.

Outcomes

11.2. Additional information. [Optional]

Further details relating to the Akzo Nobel shareholder resolution (example 1) can be found by following the link below.

  • https://www.akzonobel.com/for-media/media-releases-and-features/akzonobel-announces-changes-supervisory-board

USS holds the view that not all engagements need to be face to face meetings or have specific deliverables.  We can exert our influence as stewards in a number of ways.  For example, where we have voted against or abstained on resolutions at a shareholder meeting, or where we note areas that are not aligned to our corporate governance policies, we communicate our concerns via a letter to the company Chairman after the vote.  Where appropriate we include comments in this letter about the company’s ESG disclosure and performance,  requesting greater disclosure where necessary.   We also ask questions regarding ESG matters via e-mail.  We consider that we can reach more companies if we adopt this lighter approach with some engagements.  This is particularly true in some of the emerging markets in which USS invests where stakeholder engagement is less developed.  Asking an ESG related question can send a message to companies about the materiality of ESG matters to investors and supports the mandate of sustainability teams within these businesses.


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