Public HTML RI reports - PRI reporting framework 2020

HESTA Super Fund

PRI reporting framework 2020

Basic information [OO 01 - 09] Asset class implementation gateway indicators [OO 10 - 12] Peering questions [OO LE 01 - HF 01]

Strategy and Governance

Investment policy [SG 01 - 04] Objectives and strategies [SG 05 - 06] Governance and human resources [SG 07 - 08] Promoting responsible investment [SG 09 - 11] Outsourcing to fiduciary managers and investment consultants [SG 12] ESG issues in asset allocation [SG 13 - 15] Asset class implementation not reported in other modules [SG 16 - 17] Innovation [SG 18] Communication [SG 19]

Indirect – Manager Selection, Appointment and Monitoring

Listed Equity and Fixed Income Strategies [SAM 01] Selection [SAM 02 - 03] Appointment [SAM 04] Monitoring [SAM 05 - 07] Outputs and outcomes [SAM 08 - 09]

Direct - Listed Equity Active Ownership

Overview [LEA 01] Outputs and outcomes [LEA 09 - 11] (Proxy) voting and shareholder resolutions [LEA 12 - 21]

Confidence building measures

Confidence building measures [CM1 01 - 07]

Export Public Responses

You are in Direct - Listed Equity Active Ownership » Engagement

Engagement

LEA 02. Reasoning for interaction on ESG issues

Indicate the method of engagement, giving reasons for the interaction.

Type of engagement	Reason for interaction
Individual / Internal staff engagements	To influence corporate practice (or identify the need to influence it) on ESG issues To encourage improved/increased ESG disclosure To gain an understanding of ESG strategy and/or management We do not engage via internal staff
Collaborative engagements	To influence corporate practice (or identify the need to influence it) on ESG issues To encourage improved/increased ESG disclosure To gain an understanding of ESG strategy and/or management We do not engage via collaborative engagements
Service provider engagements	To influence corporate practice (or identify the need to influence it) on ESG issues To encourage improved/increased ESG disclosure To gain an understanding of ESG strategy and/or management We do not engage via service providers

02.2. Indicate whether your organisation plays a role in the engagement process that your service provider conducts.

Yes

02.3. Indicate the role(s) you play in engagements that your service provider conducts on your behalf.

We discuss the topic of the engagement (or ESG issue(s)) of engagement

We discuss the rationale for the engagement

We discuss the objectives of the engagement

We select the companies to be engaged with

We discuss the frequency/intensity of interactions with companies

We discuss the next steps for engagement activity

We participate directly in certain engagements with our service provider

Other; specify

We play no role in engagements that our service provider conducts.

02.4. Additional information. [Optional]

HESTA believes that we can most efficiently and effectively influence company ESG practice, performance and/or disclosure through the use of specialist engagement service providers. Each of the specialist engagement service providers represents a number of institutional investors and therefore often represents a meaningful investment in the company with which they are engaging.

HESTA has appointed Hermes Equities Ownership Services (Hermes EOS) to undertake engagement with companies held by our international equities managers. We have appointed the Australian Council of Superannuation Investors (ACSI) and Regnan Governance Research and Engagement (Regnan) to undertake engagement with companies held by our Australian equities managers.

Hermes EOS helps institutional share owners around the world to meet their fiduciary responsibilities and become active owners of public and private companies and represents more than £389 billion in assets under management.
ACSI is a collaborative membership organisation of 39 Australian and international asset owners and institutional investors, with over $2.2 trillion under management.
Regnan provides ESG engagement services on behalf of long term investors with AUD$304 billion under management.

LEA 03. Process for identifying and prioritising engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.

03.1. Indicate whether your organisation has a formal process for identifying and prioritising engagements.

Yes

Indicate the criteria used to identify and prioritise engagements for each type of engagement.

Type of engagement	Criteria used to identify/prioritise engagements
Individual / Internal staff engagements	Individual / Internal staff engagements Geography/market of the companies Materiality of the ESG factors Exposure (size of holdings) Responses to ESG impacts that have already occurred Responses to divestment pressure Consultation with clients/beneficiaries Consultation with other stakeholders (e.g. NGOs, trade unions, etc.) Follow-up from a voting decision Client request Breaches of international norms Other; (specify) We do not outline engagement criteria for our individual engagements
Collaborative engagements	Collaborative engagements Potential to enhance knowledge of ESG issues through other investors Ability to have greater impact on ESG issues Ability to add value to the collaboration Geography/market of the companies targeted by the collaboration Materiality of the ESG factors addressed by the collaboration Exposure (size of holdings) to companies targeted by the collaboration Responses to ESG impacts addressed by the collaboration that have already occurred Responses to divestment pressure Follow-up from a voting decision Alleviate the resource burden of engagement Consultation with clients/beneficiaries Consultation with other stakeholders (e.g. NGOs, trade unions, etc.) Other; (specify) We do not outline engagement criteria for our collaborative engagement providers
Service-provider engagements	Service-provider engagements Geography/market of the companies Materiality of the ESG factors Exposure (size of holdings) Responses to ESG impacts that have already occurred Responses to divestment pressure Consultation with clients/beneficiaries Consultation with other stakeholders (e.g. NGOs, trade unions, etc.) Follow-up from a voting decision Client request Breaches of international norms Other; (specify) We do not outline engagement criteria for our service providers

03.3. Additional information. [Optional]

LEA 04. Objectives for engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.

Indicate whether you define specific objectives for your organisation’s engagement activities.

Individual / Internal staff engagements

All engagement activities

Majority of engagement activities

Minority of engagement activities

We do not define specific objectives for engagement activities carried out by internal staff

Collaborative engagements

All engagement activities

Majority of engagement activities

Minority of engagement activities

We do not define specific objectives for engagement activities carried out through collaboration

Service-provider engagements

All engagement activities

Majority of engagement activities

Minority of engagement activities

We do not define specific objectives for engagement activities carried out by our service providers

04.2. Additional information. [Optional]

On an annual basis, HESTA reviews each service provider's Engagement Plan and discusses it with them to ensure that the plan:

Outlines a robust process for identifying and prioritising ESG issues and/or companies with which to engage.
Identifies the priority companies and key ESG issues (or vice versa depending on the service providers approach) for engagement and the rationale for engagement.
Outlines behaviour change objectives and measurable targets for each company to be achieved over a specified timeframe e.g. 3 months, 6 months, 1 year, 3 years, 5 years etc.
Outlines a robust process for identifying and prioritising ESG issues or company behaviours that arise during the period warrant engagement (i.e. process of reactive engagement).

HESTA places particular emphasis on ensuring there are robust processes for identifying and prioritising companies and/or ESG issues for engagement. We believe that the right processes will ensure that the right companies and/or ESG issues will be identified and prioritised.

In 2018 HESTA began development of our own engagement plans. the purpose of these plans is not to replace our service-providers, but to effectively act as a filter, facilitating focus on issues of strategic importance and companies of strategic importance to HESTA.

HESTA's plan guides our involvement in collaborative engagement, ensuring that we participate in engagements that are strategic to HESTA and where we have capacity for influence, and also that engagement objectives are aligned to the material issues that we have identified.

LEA 05. Process for identifying and prioritising collaborative engagement

Indicate whether you monitor and/or review engagement outcomes.

Individual / Internal staff engagements

Yes, in all cases

Yes, in a majority of cases

Yes, in a minority of cases

We do not monitor, or review engagement outcomes when the engagement is carried out by our internal staff.

Collaborative engagements

Yes, in all cases

Yes, in a majority of cases

Yes, in a minority of cases

We do not monitor, or review engagement outcomes when the engagement is carried out through collaboration.

Service-provider engagements

Yes, in all cases

Yes, in a majority of cases

Yes, in a minority of cases

We do not monitor, or review engagement outcomes when the engagement is carried out by our service providers.

Indicate whether you do any of the following to monitor and/or review the progress of engagement activities.

Individual / Internal staff engagements

Define timelines/milestones for your objectives

Track and/or monitor progress against defined objectives and/or KPIs

Track and/or monitor the progress of action taken when original objectives are not met

Revisit and, if necessary, revise objectives on a continuous basis

Other; specify

Collaborative engagements

Define timelines/milestones for your objectives

Track and/or monitor progress against defined objectives and/or KPIs

Track and/or monitor the progress of action taken when original objectives are not met

Revisit and, if necessary, revise objectives on a continuous basis

Other; specify

Service-provider engagements

Define timelines/milestones for your objectives

Track and/or monitor progress against defined objectives and/or KPIs

Track and/or monitor the progress of action taken when original objectives are not met

Revisit and, if necessary, revise objectives on a continuous basis

Other; specify

05.3. Additional information. [Optional]

LEA 06. Role in engagement process

06.1. Indicate whether your organisation has an escalation strategy when engagements are unsuccessful.

Yes

06.2. Indicate the escalation strategies used at your organisation following unsuccessful engagements.

Collaborating with other investors

Issuing a public statement

Filing/submitting a shareholder resolution

Voting against the re-election of the relevant directors

Voting against the board of directors or the annual financial report

Submitting nominations for election to the board

Seeking legal remedy / litigation

Reducing exposure (size of holdings)

Divestment

Other; specify

06.3. Additional information. [Optional]

LEA 07. Share insights from engagements with internal/external managers

07.1. Indicate whether insights gained from your organisation`s engagements are shared with investment decision-makers.

Type of engagement	Insights shared
Individual / Internal staff engagements	Yes, systematically Yes, occasionally No
Collaborative engagements	Yes, systematically Yes, occasionally No
Service-provider engagements	Yes, systematically Yes, occasionally No

07.2. Indicate the practices used to ensure that information and insights gained through engagements are shared with investment decision-makers.

Involving investment decision-makers when developing an engagement programme

Holding investment team meetings and/or presentations

Using IT platforms/systems that enable data sharing

Internal process that requires portfolio managers to re-balance holdings based on interaction and outcome levels

Other; specify

None

07.3. Indicate whether insights gained from your organisation’s engagements are shared with your clients/beneficiaries.

Type of engagement	Insights shared
Individual/Internal staff engagements	Yes, systematically Yes, occasionally No
Collaborative engagements	Yes, systematically Yes, occasionally No
Service-provider engagements	Yes, systematically Yes, occasionally No

07.4. Additional information. [Optional]

Insights gained from our engagements are shared with HESTA's internal investment managers and analysts on an ad hoc basis. In addition, from time to time, the applicable internal investment analyst participates in engagements arranged by our engagement service provider with a particular company.

Insights shared with HESTA's internal investment managers and analysts are communicated to the applicable external investment managers through the regular manager review meetings (to the extent possible, given that most of the engagement service providers undertake their engagements on a confidential basis and limit the extent to which HESTA can share this information outside of our organisation).

From time to time our engagement service provider Hermes EOS provides examples of engagement successes that can be communicated publically.

LEA 08. Tracking number of engagements

08.1. Indicate whether you track the number of your engagement activities.

Type of engagement	Tracking engagements
Individual/Internal staff engagements	Yes, we track the number of our engagements in full Yes, we partially track the number of our engagements We do not track
Collaborative engagements	Yes, we track the number of collaborative engagements in full Yes, we partially track the number of our collaborative engagements We do not track
Service-provider engagements	Yes, we track the number of service-provider engagements in full Yes, we partially track the number of our service-provider engagements We do not track

08.2. Additional information. [Optional]

HESTA receives regular reports from service providers on the volume of activity and progress observed.

Previous Section Next Section