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HESTA Super Fund

PRI reporting framework 2020

You are in Organisational Overview » Asset class implementation gateway indicators

Asset class implementation gateway indicators

OO 10. Active ownership practices for listed assets

10.1. Select the active ownership activities your organisation implemented in the reporting year.

Listed equity – engagement

Listed equity – voting

Fixed income SSA – engagement

Please explain why you do not engage directly and do not require external managers to engage with companies on ESG factors.

          We are not of the view that we can engage effectively for influence in fixed income SSA. Given finite resources we prefer to direct them in a way that delivers greater risk adjusted returns to members. While not a requirement under our mandates with fixed income managers, where there are material ESG issues we would expect our managers to engage on our behalf. We discuss such engagement with our fixed income managers as part of ongoing manager monitoring.
        

Fixed income Corporate (financial) – engagement

Fixed income Corporate (non-financial) – engagement

Fixed income Corporate (securitised) – engagement


OO 11. ESG incorporation practices for all assets

Select the externally managed assets classes in which you and/or your investment consultants address ESG incorporation in your external manager selection, appointment and/or monitoring processes.
Asset class
ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes
Listed equity

Listed equity - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Fixed income - SSA

Fixed income - SSA - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Fixed income - corporate (financial)

Fixed income - corporate (financial) - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Fixed income - corporate (non-financial)

Fixed income - corporate (non-financial) - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Fixed income - securitised

Fixed income - securitised - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Private equity

Private equity - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Property

Property - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Infrastructure

Infrastructure - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Cash

Cash - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

Other (2)

Other (2) - ESG incorporation addressed in your external manager selection, appointment and/or monitoring processes

11.3b. If your organisation does not integrate ESG factors into investment decisions on your externally managed assets, explain why not.

N/A

11.4. Provide a brief description of how your organisation includes responsible investment considerations in your investment manager selection, appointment and monitoring processes.

Manager Selection

When considering a new external investment manager in any of our key asset classes HESTA, as well as our consultant or advisor will assess the prospective Manager's:

  • Approach and policies to incorporating ESG within its investment processes and decision making, across all stages of its investment, including pre-investment, due diligence and post investment asset management.
  • Processes to incorporate ESG within its investment processes and decision making across all stages of its investment, including pre-investment, due diligence and post investment asset management.
  • Capabilities related to ESG including tools, resources, reporting as well as thought leadership and involvement in any external responsible investment collaborations and/or initiatives.
  • Willingness to engage with HESTA and improve its capabilities and processes in the future.

The ESG assessment of a prospective external investment manager will only be one of a range of factors which determine the suitability of a manager and its strategy for inclusion in HESTA's portfolio.

HESTA's Manager ESG Assessment is undertaken predominantly by the relevant asset class team, with support from the Responsible Investment team. The Manager ESG Assessment is undertaken using our comprehensive suite of ESG criteria which cover the elements identified above and includes a scoring and weighting framework for each categrory and criteria. The Assessment is conducted through (i) a desktop review of the ESG assessment provided by HESTA's consultant or advisor, (ii) a desktop review of any documented ESG information e.g. policies, relevant questionnaires (i.e. GRESB, PE LP DDQ) reports etc, provided by the prospective manager and (iii) an ESG focused meeting with the prospective manager.

A manager's score in their ESG assessment is discussed among the relevant asset class team, consulting the Responsible Investment team as required. In cases where a manager is early in its RI journey, HESTA might still recommend an investment in the manager provided that there is willingness from the manager to engage with HESTA and improve its RI practices post appointment.

The results from the manager assessment are incorporated in HESTA's recommendation memo, which is reviewed by our CIO when approving an investment decision.

Manager Appointment

When appointing a new external investment manager in any of our key asset classes, ESG requirements are incorporated into contractual arrangements, either within an investment management agreement or a side letter.

Manager Monitoring

HESTA shares the results from the Manager ESG assessment with external managers in a 'Feedback Pack' which includes manager's score relative to peers and their areas of strength and weakness. We use this 'Feedback Pack' as tool for engaging with managers and monitoring their progress in RI.

Additionally we include ESG questions in manager's meetings and discuss examples of how managers are applying the RI policies and processes at different stages of decision-making.

HESTA also holds ad hoc meetings/calls when there are specific ESG incidents.

 


OO 12. Modules and sections required to complete

12.1. Below are all applicable modules or sections you may report on. Those which are mandatory to report (asset classes representing 10% or more of your AUM) are already ticked and read-only. Those which are voluntary to report on can be opted into by ticking the box.

Core modules

RI implementation directly or via service providers

Direct - Listed Equity active ownership

RI implementation via external managers

Indirect - Selection, Appointment and Monitoring of External Managers

Closing module

12.2. Additional information. [Optional]


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