This report shows public data only. Is this your organisation? If so, login here to view your full report.

Universities Superannuation Scheme - USS

PRI reporting framework 2018

Export Public Responses

You are in Indirect – Manager Selection, Appointment and Monitoring » Outputs and outcomes


SAM 08. Percentage of externally managed assets managed by PRI signatories

08.1. 組織では、RIに関するベストプラクティスが保有資産の運用に確実に適用されるようどのようにして万全を図っているその内容を説明してください


          For public market assets, we have developed an assessment framework that applies a score out of five across key areas of implementation (as outlined in SAM 01.2 and SAM 05.3). Using a spider diagram we are then able to identify strengths and weaknesses for particular fund managers versus their peers. We will then use this data to engage with the fund managers to highlight areas of weakness and request further developments. Leveraging our in-house RI team, we can also challenge external managers more thoroughly on their assertions.

For property, we encourage our fund managers to report against the GRESB framework to benchmark ESG performance.


          USS has adopted a rigorous process of reviewing external managers and is constantly reviewing the market, new products and ideas to ensure they deliver the best risk adjusted returns for the scheme.

08.2. Additional information. [Optional]

Internally, the scheme continues to strive to adopt and develop best practice on the way we implement the RI strategy across all asset classes - further information and examples of this are provided in the other sections in our response to the PRI Framework.

SAM 09. Examples of ESG issues in selection, appointment and monitoring processes

09.1. 報告年度において、運用会社の選定、指名やモニタリングプロセスの過程で、ESG問題がどのように対処されているかを示す事例を挙げてください。

          Review monitoring meeting for ethical bond and public equities mandates

Note this case study relates to fixed income corporate (financial and non-financial and public-equities).


Members of the RI team reviewed the USS quarterly questionnaire responses, published materials on stewardship and RI including the PRI Transparency Report, plus voting data.

A meeting was held between USS's RI team, directors responsible for governance and sustainability, the UK institutional director and client manager at the external manager. It focused on reporting and transparency, active ownership practices, ESG integration, resourcing and ethical fund governance.

On reporting and transparency, the manager explained plans for reporting against the UN Sustainable Development Goals. Their RI reporting is already very well advanced.

On active ownership, the manager provided case studies on company engagements undertaken individually and collaboratively for bonds and equities covering environmental, social and governance issues. For example, a Japanese company where they had contributed to achieving more independent and external directors on the board and a reduced board size.

On ESG integration, they restructured the team, allocating sector responsibilities to aid integration and the bespoke re-weighting of MSCI ESG scores. 

They discussed how they carefully assess the purpose of the bond issuance to avoid 'greenwash'.

They discussed advisory committee succession and refreshment.


USS obtained assurance that RI practices at the fund manager were well developed and being applied to both the equities and bond fund mandates undertaken by the manager.

That ESG data providers were in place and being utilised by the firm.

That the manager was seeking to keep apace of new developments in RI, such as SDG reporting and emergent thinking on the responsible investment and nutrition.

That the firm were adhering to PRI principles and were taking part in other industry initiatives, such as an Asian Corporate Governance Association conference on corporate governance in India and a collaborative engagement organised by the Investor Forum focused on human rights and employment practices within apparel companies and their supply chains. 



          Due diligence for a new equity fund/ fund manager

USS's RI team undertook due diligence on the appointment of a new fund manager for emerging and frontier markets.

A call was undertaken between two members of the USS RI team, the Co-Head of Emerging Markets, the Head of Investment Strategy and representatives from the EMEA Institutional and IR teams.

The call discussed ESG data for emerging and frontier markets, ESG integration, stewardship, voting, RI policy and PRI membership.


The fund manager provided a thoughtful overview and demonstration of how ESG factors are integrated into their investment decision making processes.

They outlined the difficulty with obtaining quality ESG data within the markets the fund operates, and outlined their bespoke solution and resourcing for this. They shared their 10-point proprietary ESG model with the scheme.

They cited examples of companies they did not invest in, due to concerns around ESG practices, such as labour practices or poor labour relations.

The manager also outlined thematic work on ESG matters to identify investment opportunities.

The manager provided several examples to demonstrate their stewardship and engagement activities, particularly raising concerns on related party transactions, business ethics and stakeholder management, including labour force.

          Due diligence on investment into a property fund

The Property Sustainability Manager and RI team reviewed materials on the manager's approach to RI.

Information was obtained from the data room, the manager's response to the USS RI Questionnaire, the manager's GRESB (Global Real Estate Sustainability Benchmark) report and MSCI ratings, plus additional correspondence with the Scheme on ESG related matters.

Questions were posed to the manager covering

  • the manager's overall approach to due diligence for new properties, including the use of specialised environmental consultants and their processes for assessing contaminated land, flooding, obsolescence and building compliance risks. 
  • anti-bribery and corruption practices and asset management, including issues such as ISO14001 certification, environmental management systems and performance targets for waste, water and energy usage and the likely availability of carbon footprinting data.
  • health and safety the use of contractors, compliance with labour laws and the modern slavery act.
  • reporting, disclosure and membership of PRI - the fund manager already produced a GRESB report and had received a green star rating which we welcomed.

A conference call was then held between USS and the manager's asset management and ESG representatives to discuss responses to the above in further detail.


The process provided USS with information to opine that the fund manager had sufficient processes in place to review Environmental, Social, and Governance (ESG) issues within their investment decision making processes.  

Recommendations were made for areas where we would like to see further progress - for example the scope of the GRESB reporting was limited to only one type of property assets in one market. We recommended the manager consider rolling this out to other types of property in other jurisdictions.

          Listed equity - collective asset owner meeting

Alongside a group of eight other asset owners (under the auspices oft of the UK Pension Scheme RI Roundtable), USS met with one of the scheme's external passive fund managers to discuss voting and climate change.

The focus of the meeting was to understand the manager's views on climate change, the TCFD (Task Force on Climate-related Financial Disclosures) and to discuss why the manager had taken a different stance to voting on shareholder proposals relating to climate change in Europe compared to the US.



The fund manager outlined the importance of governance in the management of environmental issues.

They explained they seek to 'socialise' the measurement and reporting on climate change at their portfolio companies through engagement, rather than voting.

They outlined that different voting decisions on shareholder proposals arose due to the differing responses from company boards and the different stages of the companies in their approach to climate risk. The manager would only support shareholder proposals where they were the right ask at the right time. They prefer to engage rather than use shareholder proposals.

They manager outlined their plans to engage with companies to disclose on climate change related matters, in line with the TCFD recommendations, once the final report was published.

The discussions have continued following the meeting.

          Due diligence for new commitment to private equity fund

The scheme's Private Markets Group was looking to provide a new commitment to a private equity GP.

The GP provided detailed information on their approach to ESG integration and responsible investment in their standardised Due Diligence Questionnaire (DDQ) for the fund, which was made available to potential investors in fund’s data room. 

The GP also provided information on their website.

As the questions we would usually ask in the USS Due Diligence questionnaire, were already answered by the GP's standard documentation, we amended our diligence process slightly to use the opportunity to probe deeper on ESG case studies in a call ahead of the commitment. 

We spoke with the Head of Responsible Investment, covering follow-up questions on their sustainability policy, oversight and responsibilities on ESG at the firm, their interactions with portfolio companies and their plans for TCFD (Task Force on Climate-related Financial Disclosures) and UN Sustainable Development Goals (SDG) reporting.


Based on the data we reviewed and the responses to the questions on the call, we considered the GP probably represented best practice in ESG integration in the private equity sector.

We raised no concerns about the proposed commitment to the GP.

The discussions also helped to inform USS's view on market leadership, and thoughts of where the scheme could develop its in-house processes and activities in future.


09.2. Additional information.