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UniSuper Management Pty Limited

PRI reporting framework 2020

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

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

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

UniSuper has a formally documented set of guiding principles (annually endorsed by the Investment Committee). These guiding principles augment our 5 investment beliefs. Key is the notion and belief that ESG factors are important considerations in assessing investment risk and determining earnings sustainability. 

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

UniSuper, as a regulated superannuation fund and fiduciary, takes seriously the duty incumbent upon it to avoid the permanent loss of member capital and to invest member funds in a pragmatic manner.

UniSuper's investment approach is informed by its Investment Beliefs, Investment Guiding Principles and Responsible Investment and Proxy Voting Policy.

UniSuper's approach to ESG and RI, can be categorised as follows:

1. Active ownership - as a large investor we have a duty to responsibly exercise our ownership rights. We do so via extensive engagement with investee companies and by voting at company AGMs.

2. ESG integration and investment due diligence - We continually strive to assess and consider ESG risk as part of the investment management and decision making process.

3. Member choice (sustainable options) - ESG considerations are integrated into all investments (UniSuper was one of the first Australian super funds to screen tobacco from all portfolios in 2011). UniSuper also provides for member choice and provides its members with three dedicated options which apply more extensive screens and pursue relevant thematics. Specifically, UniSuper has two Sustainable options (Balanced and High Growth) and a Global Environmental Opportunities (GEO) option.  All three of these options exclude alcohol, gaming, weapons and fossil fuels. The two Sustainable options then seek to target investments in companies that perform well from a sustainability perspective (i.e. positive screening), noting also that the Sustainable Balanced option also has a significant green bond allocation. The GEO option targets investments in companies that derive >50% of their revenues from clean energy, energy efficiency, clean water, green buildings and waste / pollution control.

4. Collaboration and advocacy - In order to demonstrate our commitment and pursuit of improved ESG / RI standards and performance we also participate in a broad range of collective / collaborative initiatives. This collaborative work is both informal with peers and via a range of formal avenues (e.g. PRI, ACSI, RIAA, IGCC, ACGA, ESG RA).

01.6. Additional information [Optional].

          
        

SG 01 CC. Climate risk

01.6 CC. Indicate whether your organisation has identified transition and physical climate-related risks and opportunities and factored this into the investment strategies and products, within the organisation’s investment time horizon.

Describe the identified transition and physical climate-related risks and opportunities and how they have been factored into the investment strategies/products.

Portfolio Analysis/ Risk assessment in current holdings - published for each option in our TCFD report to members:

  • Transition - exposure to fossil fuels- exploration, production, transportation and use
  • Transition - exposure to supporting infrastructure and industrials reliant on fossil fuels - eg Airports, steel manufacturing
  • Transition - exposure to financial services sector - Insurance and banking
  • Transition - exposure to green products and services
  • Carbon Footprint - Relative to MSCI benchmark
  • Physical Risks - exposure to severe weather events
  • Physical risks - exposure to rising tides for large asset exposure (property and infrastructure)
  • Company response -  measuring how companies are responding - with Carbon targets, renewable energy and energy efficency

Due Diligence:

  • Considering threats/opportunities from physical risks - such as rising tides, severe weather, changing operations and customer trends as a result of climate change
  • Considering costs associated with "greening" existing infrasturcture, what has been done, what are plans for the future etc

Investment product development:

  • 7 of UniSuper's 16 options are fossil fuel free. 
    • 3 as a result of specific exclusions/screens - Sustainable High Growth, Sustainable Balanced, Global Environmental Opportunities
    • 4 as a result of the investment universe - Global Companies in Asia, Listed Property, Australian Bonds and Cash

01.7 CC. Indicate whether the organisation has assessed the likelihood and impact of these climate risks?

Describe the associated timescales linked to these risks and opportunities.

Risk exposures were considered a stress test (i.e. our total exposure to thermal coal is 0.5% - no further analysis was carried out). If the exposure to a particular risk was greater than 5%, then we have considered a range of scenarios. For example, our exposure to gas is >5%, and in our latest TCFD report we detailed some of the factors we are monitoring with respect to gas and the shift to renewable energy. 

With respect to physical risks, UniSuper used publically available data and scenarios:

  • Rising tides - 4 degree temperature rise in ~80 years. 
  • Severe weather - current experience/findings, which did not lead to further analysis as the exposure was less than 5%.

 

01.8 CC. Indicate whether the organisation publicly supports the TCFD?

01.9 CC. Indicate whether there is an organisation-wide strategy in place to identify and manage material climate-related risks and opportunities.

Describe

As a regulated Superannuation (pension) fund, the key risks and opportunities associated with climate are in our investments.

Our Climate related risk report details our approach that we take in our investment portfolio. 

We have 3 options available to members that specifically target climate related themes - 2 Sustainable Options - which screen out fossil fuel companies (as well as gaming, alcohol and weapons + fund wide tobacco), and Global Environmental Opportunities, which invests in companies that receive more than 50% of their revenues by addressing environmental themes - renewable energy, water and waste management, pollution control, energy efficiency and green buildings. 

1.10 CC. Indicate the documents and/or communications the organisation uses to publish TCFD disclosures.

specify

          Our TCFD disclosures are published on our website: https://www.unisuper.com.au/investments/responsible-investing/climate-risk-disclosure
        

SG 02. Publicly available RI policy or guidance documents

 

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

02.3. Additional information [Optional].


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Our Investment Procedures Manual specifically makes provision for managing conflicts of interest . The Investment Committee (IC) is charged with overseeing the management of conflicts with regard to UniSuper's investment process and the IC must comply with the IC code of conduct. All IC members and investment staff are required to maintain a register of personal interests.

Internally - UniSuper has a robust and heavily monitored securities trading policy and approval process  in place - "UniSuper Restricted Securities Trading Policy". Investment staff are not allowed to accept any gifts and may only accept some forms of entertainment and only in certain circumstances.

Externally - UniSuper includes clauses in the Investment Management Agreements regarding conflict of interest management.  Our investment managers are required to manage material sources of conflict in accordance with their own or industry codes of practice.

Further from a governance perspective, where we have participated in a corporate action, such as a rights issue or equity raising, we do not vote as part of the shareholder approval process.

 

 

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios (Private)


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