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Universities Superannuation Scheme - USS

PRI reporting framework 2018

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Governance and human resources

SG 07. RI roles and responsibilities

07.1. Indicate the roles present in your organisation and for each, indicate whether they have oversight and/or implementation responsibilities for responsible investment.

Roles present in your organisation

          Head of Private Markets Group
        

Other description (1)

          Head of Equities
        

Other description (2)

          Strategy Coordination Team (StratCo Team)
        

07.2. For the roles for which you have RI oversight/accountability or implementation responsibilities, indicate how you execute these responsibilities.

The USS Ltd board has ultimate responsibility for addressing all issues relevant to the scheme, and this includes the oversight and management of climate change related risks and opportunities.  The USS Ltd Board has supported the schemes’ activities associated with addressing climate change risk and opportunities since 2001, when the scheme did its first work assessing the implications of the issue for institutional investors[1]. 

The board agrees the RI strategy, and formally reviews the RI team’s activities annually. The trustee directors sign off key focus areas and policies, including the fund’s on-going activities relating to climate change.  In addition to this annual reporting cycle, the board receives other input on ESG management, including climate change, as and when necessary.  It also receives regular updates on the climate change related activities that the scheme’s executive are involved in.  In addition, the USS board has received training on climate change as part of its training on responsible investment

The trustee board delegates responsibility for day to day management of the scheme to the group executive.  The investment committee, a committee of the board, takes the lead in oversight of the executive’s management of climate change and other ESG related issues. 

USS is unlike the majority of pension funds in that it has an in-house asset manager, USS Investment Management, which manages the majority of the scheme’s assets.  USSIM provides investment advice and management activities for USS, which includes advice on climate change and other ESG / RI issues.  

Unlike the vast majority of Assets Owners, USS demonstrates and resources its commitment to RI and addressing issue like climate change through the employment of in house Responsible Investment experts.  USS Investment Management has an RI team of six, and also employs a separate Sustainability Manager for the scheme's property portfolio and other Private Market Group assets.  Having this internal resource means that expertise on the investment implications of climate change is readily available to both trustees and the executive, and the RI team provides input to the trustee board on ESG issues, including climate change, as and when required.  

Day to day oversight and management of the scheme's climate strategy rests with the RI team.  The team works with the internal asset managers to ensure integration of climate change and other ESG risks into investment decision making across asset classes.  The RI team leads much of the stewardship activity associated with encouraging both listed companies and other assets to manage better climate change related risks. 

Whilst the USS Investment Management CIO / CEO has ultimate responsibility for climate change related activities, the oversight of the RI function is via the Head of Equities, a member of USS Investment Management’s executive committee. 

Details of the RI team’s activities, including actions associated with climate change, can be found here:  https://www.uss.co.uk/how-uss-invests/responsible-investment.  

 

[1] https://www.uss.co.uk/~/media/document-libraries/uss/investments/riactivities/uss-climate-change--a-risk-management-challenge-for-investors-2001.pdf?la=en

07.3. Indicate the number of dedicated responsible investment staff your organisation has.

7 Number

07.4. Additional information. [Optional]

USS has an experienced RI team of six plus one dedicated Sustainability Manager in the Property Team.

The RI function works very closely with the investment teams to integrate RI considerations into investment decision making across the scheme's assets.

As the majority of the scheme’s assets have to date been managed in-house, USS's RI strategy has focused on the development of internal capabilities, particularly the integration of RI practices into investment processes. The strategies developed by the fund have varied according to asset class and portfolio. These are described in detail in the PRI reporting sections relating to our direct assets.

In all instances, portfolio management executives and chief-level staff at the scheme (the Executive Committee or 'ExCo') have been involved in the design, implementation or oversight of RI processes. The RI Team reports to ExCo members and regularly presents or provides papers for the Investment Committee and Board directors (trustees) regarding RI matters across different asset classes.  Where appropriate this includes how RI has been reviewed in the appointment and/or monitoring of external fund managers as outlined in the SAM section.

The RI team periodically undertakes induction training for both new staff and trustees. Presentations to trustees may include sessions on specific topics or initiatives, (e.g. the Montreal Pledge and carbon footprinting, tobacco, proxy voting or auditor independence) at board meetings.  "Open House" sessions for the trustees have been held at USS Investment Management since 2015, enabling the trustees to meet the investment teams to ask questions in a more informal and open manner. The RI team has been involved in these sessions, with several trustees using the opportunity to explore the RI strategy and RI team's activities in more depth.

 


SG 07 CC. Climate-issues roles and responsibilities

07.1 CC. Indicate the roles in your organisation, and indicate for each whether they have oversight and/or implementation responsibilities for climate-related issues.

Roles present in your organisation

          Head of Equities
        

07.1a CC. For the board level roles or for which you have climate-related issues oversight/accountability or implementation responsibilities, indicate how you execute these responsibilities.

The USS Ltd board has ultimate responsible for addressing all issues relevant to the scheme, and this includes the oversight and management of climate change related risks and opportunities.  The USS Ltd board has supported the schemes’ activities associated with addressing climate change risk and opportunities since 2001, when the scheme did its first work assessing the implications of the issue for institutional investors[1]. 

The board agrees the RI strategy, and formally reviews the RI team’s activities annually. The trustee directors sign off key focus areas and policies, including the fund’s on-going activities relating to climate change.  In addition to this annual reporting cycle, the board receives other input on ESG management, including climate change, as and when necessary.  It also receives regular updates on the climate change related activities that the scheme’s executive are involved in.  In addition, the USS board has received training on climate change as part of its training on responsible investment

The trustee board delegates responsibility for day to day management of the scheme to the group executive.  The investment committee, a committee of the board, takes the lead in oversight of the executive’s management of climate change and other ESG related issues. 

[1] https://www.uss.co.uk/~/media/document-libraries/uss/investments/riactivities/uss-climate-change--a-risk-management-challenge-for-investors-2001.pdf?la=en

07.1b CC. For the management-level roles which assess and manage climate-related issues, provide further information on the structure and process involved.

USS is unlike the majority of pension funds in that it has in-house asset manager, USS Investment Management, which manages the majority of the scheme’s assets.  USSIM provides investment advice and management activities for USS, and includes advice on climate change and other ESG / RI issues.  

Unlike the vast majority of Assets Owners, USS demonstrates and resources its commitment to RI and addressing issue like climate change through the employment of in house responsible investment experts.  USSIM has an RI team of six, and also employs a separate Sustainability Manager for the scheme's property portfolio and other Private Market Group assets.  Having this internal resource means that expertise on the investment implications of climate change is readily available to both trustees and the executive, and the RI team provides input to the trustee board on ESG issues, including climate change, as and when required.  

Day to day oversight and management of the scheme's climate strategy rests with the RI team.  The team works with the internal asset managers to ensure integration of climate change and other ESG risks into investment decision making across asset classes.  The RI team leads much of the stewardship activity associated with encouraging both listed companies and other assets to manage better climate change related risks. 

Whilst the USS Investment Management CIO / CEO has ultimate responsibility for climate change related activities, the oversight of the RI function is via the Head of Equities, a member of  USS Investment Management’s executive committee. 

Details of the RI team’s activities, including actions associated with climate change, can be found here:  https://www.uss.co.uk/how-uss-invests/responsible-investment  


SG 08. RI in performance management, reward and/or personal development

08.1. Indicate if your organisation’s performance management, reward and/or personal development processes have a responsible investment element.

Board members/Board of trustees

08.2. Describe any activities undertaken during the reporting year to develop and maintain Board members’ skills and knowledge in relation to responsible investment.

The RI team formally reports to the Investment Committee at least twice a year on progress against the RI Strategy and presents to the Board Management Committee at least annually.

The RI team carried out a specific RI training for the board on RI issues, covering issues such as the RI strategy, climate change, and fiduciary duty in 2017.  The RI team also discussed specific examples or case studies of RI stewardship and integration across asset classes. 

The RI team also makes issue-based or project-based presentations to the Board as required. For example, the RI team outlined the approach taken for RI due diligence for the appointment of the external fund managers for USS Investment Builder DC mandates and participated in discussions on fiduciary duty and divestment and the position of the DC funds on RI issues.  

Chief Executive Officer (CEO), Chief Investment Officer (CIO),  Investment Committee

Other C-level staff or head of department

          Head of Private Markets Group
        

Portfolio managers

Investment analysts

Dedicated responsible investment staff

Other role (1) [from SG 07]
          Head of Equities
        
Other role (2) [from SG 07]
          Strategy Coordination Team (StratCo Team)
        

08.3. Provide any additional information on your organisation’s performance management, reward and/or personal development processes in relation to responsible investment.

Progress against the RI Strategy and RI objectives forms the core KPIs and performance review points for the RI team and the property team's Sustainability Manager. The scheme's commitment to RI is articulated within the role profiles for the public equities investment team and RI activities are taken into account in their performance reviews and bonus calculations. However annual RI objectives are not generally formalised for individuals or departments beyond RI.

Cross-departmental work is encouraged and articulated in staff's objectives, supported by the appraisal and bonus calculation processes. The RI team and RI processes are integral to USS as outlined in the responses to the modules reported on under the PRI Framework. The RI team works closely alongside other departments and the annual performance appraisal process asks all teams for examples of working across departments, including RI.

USS Investment Management has specific KPI's which have in recent years included ESG related targets.  Failure to achieve these KPIs has implication for USS Investment Management as a whole, in addition to the RI Team. 

08.4. Describe the level of experience board members/trustees/chief-level staff have with incorporating ESG factors into investment decision-making processes.

          
        

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