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HESTA Super Fund

PRI reporting framework 2020

You are in Strategy and Governance » Innovation

Innovation

SG 18. Innovative features of approach to RI

18.1. Indicate whether any specific features of your approach to responsible investment are particularly innovative.

18.2. Describe any specific features of your approach to responsible investment that you believe are particularly innovative.

ESG Integration - Manager ESG assessment framework

Our Manager ESG Assessment Framework comprises a comprehensive suite of criteria for managers on their approach to, and practices for, incorporating ESG into their investment processes and decision making. We also developed a scoring and weighting framework so that we can assess and score each criteria, consistently and comparably.

During the period we developed a feedback pack to improve the level of engagement with managers. The pack provides managers with scores relative to peers, an assessment of their strengths and weaknesses and examples of best practice to encourage progress.

An analysis of relative manager performance against our scoring methodology is also reported to HESTA's Investment Committee and Board for the purposes of evaluating portfolio level ESG performance.

Benefits of this approach are that it:

  • provides a comprehensive, robust and documented assessment;
  • ensures assessments are consistent and comparable across managers; and
  • highlights strengths and weaknesses in a manager's approach to, and practices for, incorporating ESG.
  • encourages managers to continue advancing their ESG integration efforts. 

Active Ownership

In Australia, we engage with our managers holding the companies on our behalf when determining the way in which we will vote on contentious resolutions. With close to twenty Australian equities managers, depending on the company, this can be an extensive exercise.

We consolidate all the feedback from our managers for each contentious resolution, and along with advice from our proxy voting advisor, we determine the way in which we will vote. Where relevant, we provide feedback to our managers when we vote against company management on a resolution including why we voted against the resolution and request that they communicate our feedback to the company in question.

Benefits of this approach are that it:

  • evidences HESTA's commitment to active ownership;
  • ensures consistency on voting for companies held by different managers on HESTA's behalf;
  • ensures appropriate consideration of any contentious resolutions by our managers;
  • facilitates greater understanding by our managers of HESTA's view on key governance issues;
  • encourages increased engagement by our managers with companies on key governance issues; and
  • enhances knowledge and understanding on key governance issues across the industry.

We know from our proxy advisor that this approach is not common in the market place.


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