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Universities Superannuation Scheme - USS

PRI reporting framework 2018

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Asset class implementation not reported in other modules

SG 16. ESG issues for internally managed assets not reported in framework

Describe how you address ESG issues for internally managed assets for which a specific PRI asset class module has yet to be developed or for which you are not required to report because your assets are below the minimum threshold.

Asset Class

Describe what processes are in place and the outputs or outcomes achieved

Forestry

USS is invested in ASA and/or FSC certified timberland in Australia and US. The scheme ensures that timberland investments have adopted best practice health and safety and environmental management standards through engaging directly with these assets on a regular basis and in some instances having a board position. 

Health, safety and environmental performance is a standard agenda item for all board meetings at HQPlantations. 

HQPlantations’ forest management systems are independently certified under the Forest Stewardship Council  forest management standard and the Australian Forestry Standard (AFS). Both forest certification systems require HQPlantations to meet internationally-accepted criteria for sustainable forest management covering economic, social, environmental and cultural perspectives. Details are described in HQP's Forest Stewardship Plan published in January 2017 at http://www.hqplantations.com.au/stewardship.html#publications

 (please note this is an 8MB file)

Other (1) [as defined in Organisational Overview module]

Other asset classes reported in OO:

Private Debt - please see our responses under the PE and INF modules of the report, for details about how we approach the integration of ESG matters into our private markets investment process. The Private credit strategy is also outlined on the scheme's website at https://www.uss.co.uk/how-uss-invests/the-fund/investments/private-markets/private-credit

 

16.2. Additional information [Optional].


SG 17. ESG issues for externally managed assets not reported in framework

17.1. Describe how you address ESG issues for externally managed assets for which a specific PRI asset class module has yet to be developed or for which you are not required to report because your assets are below the minimum threshold.

Asset Class

Describe what processes are in place and the outputs or outcomes achieved

Fixed income - Securitised

We have yet to formalise how to monitor and consider ESG and RI matters specifically for securitised fixed income.

Hedge funds - DDQ

Select whether you use the PRI Hedge Fund DDQ

Hedge funds

USS's 'Expectations of governance of hedge funds' are published on the scheme's website outlining USS's approach - see https://www.uss.co.uk/~/media/document-libraries/uss/investments/riactivities/expectationsgovernancehedgefunds2010.pdf?la=en .

The scheme undertakes due diligence and KYC investigations for all new fund directors including one-to-one conversations with all new independent directors. Concerns raised by the RI Team concerning proposed changes to the governance of one of the scheme's hedge funds led to those proposals being rejected during the year.

In addition, the scheme engages with hedge funds, regulators and industry bodies to improve governance and transparency at industry level.

USS's Head of Strategy Coordination is a trustee of the Hedge Fund Standards Board (HFSB). The HFSB aims to create a framework of transparency, integrity and good governance for the hedge fund industry and has worked closely with UN PRI. 

Cash

As part of the scheme's due diligence for the selection and appointment of external fund managers to USS's DC offering - 'USS Investment Builder' - details on the managers' approach to RI were considered from the outset.

USS's RI Team then reviewed ESG integration and met with the fund manager (via teleconference) to discuss RI in more depth for the shortlisted cash fund.

USS considered the manager's commitment to RI; the experience of the team; their use of ESG data from rating agencies and EGS services as part of their investment process; internal governance and assurance processes; their participation in collaborative RI initiatives, including the UN PRI; and market level engagement on ESG matters.

17.2. Additional information.


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