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BT Financial Group

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.

BT's approach to responsible investment is outlined in our Responsible Investment Position Statement available at BT.com.au/sustainability. This outlines BTs approach to responsible investment, centered on 4 principles:

  1. Consideration of ESG factors in the investments process can help drive better financial outcomes and improve risk-adjusted returns;
  2. We make solutions available to our customers to empower them to manage their own environmental and social impacts;
  3. As institutional investors and custodians of our customers’ money, we have a responsibility to be active owners; and
  4. Transparency counts.

For funds managed internally (through BT Investment Solutions) the approach to ESG integration is set out in more detail in our Sustainable Investment Approach available on our website (https://www.bt.com.au/content/dam/public/btfg-bt/documents/about-bt/corporate-sustainability/BT-sustainable-investment-approach.pdf)

 

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]

As the steward of our customer's assets, BT has a responsibility to protect and promote our customers' financial interests and ensure the assets they entrust to BT continue to endure and prosper into the future. We believe that responsible investment is intrinsic to the provision of long-term value for our customers.

BT’s responsible investment position statement sets out BT’s approach to responsible investing and provides a framework for understanding and managing ESG impacts, risks and opportunities across the portfolios within BT.

The position statement outlines the 4 key principles that guide BT’s approach to responsible investment (see 01.04 above), and articulates how BT approaches key elements of responsible investment including exclusions, ESG integration and active ownership.

Ultimate responsibility for our Responsible Investment approach rests with our Board, General Managers and Senior Management Team. Our investment management team, led by the Chief Investment Officer (CIO), has responsibility for the day-to-day integration and management of ESG impacts, risks and opportunities in the multi-manager investment portfolios. Investment professionals with specialist knowledge of ESG issues and risks are employed within the investment team.

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.

As many of the portfolios that BT manages for our customers are invested for the long-term (over 10 years), BT is concerned about the risks arising from climate change and recognises the impact this may have on the longevity and valuation of the companies and assets we invest in. We also recognise the growing availability of, and demand for, investment in opportunities that support the transition to a low carbon economy.

BT recognises that the systemic nature of climate-related risks will have a range of implications in the short (1-3 years) and medium (4-9 years) term, and that these impacts will vary across asset classes, sectors and geographies.

These impacts will not only affect BT’s current investments, but may also change the type of investments BT and our customers make in the future, especially as new technologies emerge and older, more carbon intensive industries or assets decline or are replaced.

Our diversified portfolios, including our MySuper Lifestage Funds, are invested in a range of asset classes.

Examples of the climate-related issues that could have a material financial impact in some of the asset classes we invest in, over our defined time horizons, are provided in our climate-related disclosures (available at bt.com.au/sustainability). This also describes how BT responds to these impacts where we act in the capacity of investment manager.

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.

As part of BT's annual climate-related disclosures, we provide our customers with examples of the climate-related issues that could have a material financial impact in some of the asset classes we invest in, over our defined time horizons (long-term 10+years, medium-term (4-9 years) and short-term (1-3 years)) . These have been summarised in question 1.6 above.

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 part of the Westpac Group, one of Australia’s largest corporations with a proud track record in sustainability, we recognise there are significant environmental, social and economic benefits to limiting global warming to less than two degrees Celsius above pre-industrial levels, while supporting greater resilience to the impacts of such a change. Westpac Group has demonstrated a strong commitment to managing climate-related impacts, detailed in the Group’s Climate Change Position Statement and 2020 Action Plan.

This Climate Change Position Statement sets out five key principles that underpin Westpac Group’s approach to addressing climate change. These are:

1. A transition to a net zero emissions economy is required;

2. Economic growth and emissions reductions are complementary goals;

3. Addressing climate change creates financial opportunities;

4. Climate-related risk is a financial risk; and

5. Transparency and disclosure matters

This year Westpac extended the breadth and depth of climate change scenario analysis first undertaken in 2016 to build on its understanding of short, medium and long-term impacts of different climate change scenarios on its customers, communities and business. More information on Westpac Group's approach to climate change is available in the 2019 annual sustainability performance report at www.westpac.com.au

In relation to investments made where a Westpac Group entity is acting as a trustee (for example RSE Licensee, Responsible Entity), the governance and strategies for climate-related risk, and environmental, social and governance risk more broadly, is the responsibility of the relevant board and management of these entities. 

Responsibility for the management of climate-related risks and opportunities through investment portfolios is cascaded from the BT Boards to the appointed investment managers. For portfolios where BT acts as investment manager, including our MySuper Lifestage Funds, climate-related risk is addressed through two channels. Firstly, by reviewing the ability of our external portfolio managers to integrate ESG considerations in their investment process, depending on their investment strategy and capabilities. We encourage our external portfolio managers to consider and report on climate risks within the portfolios. Secondly, through our engagement and proxy voting activities which seek to address material impacts and issues in the companies in which we invest.

At this stage BT’s preference is to influence companies to address material ESG issues, including climate change, through engagement and proxy voting, rather than blanket screening. We will continue to consider other risk management strategies, and our approach may alter over time.

More information can be found in BT climate-related disclosures at bt.com.au/sustainability

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

specify

          BT publish public climate-related disclosures, these are available at bt.com.au/sustainability
        

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].

BT's approach to responsible investment is outlined in our responsible investment position statement available at bt.com.au/sustainability, this document addresses governance, process and reporting for ESG incorporation, exclusions, engagement and proxy voting across our FUM.  

As part of the Westpac Group, BT's corporate activities are informed by the Group's approach to ESG issues (including climate change and human rights). These are available publicly at https://www.westpac.com.au/about-westpac/sustainability/our-positions-and-perspectives/. In relation to investments made where a Westpac Group entity is acting as a trustee (for example RSE Licensee, Responsible Entity) or insurer, the governance and strategies for human rights risk, and environmental, social and governance risk more broadly, is the responsibility of the relevant board and management of these entities. 

For funds managed internally (through BT Investment Solutions) the approach to ESG integration is set out in more detail in our Sustainable Investment Approach available on our website (https://www.bt.com.au/content/dam/public/btfg-bt/documents/about-bt/corporate-sustainability/BT-sustainable-investment-approach.pdf)

BT's approach stewardship of asset ownership, is outlined in the BT Stewardship Policy - available at https://www.bt.com.au/content/dam/public/btfg-bt/documents/about-bt/corporate-sustainability/BTFG-stewardship-policy.pdf 

Reporting on BT's approach is via our website bt.com.au/sustainability and through the Westpac Group annual reporting suite available at https://www.westpac.com.au/about-westpac/investor-centre/annual-report/

BT provides specific reporting on our approach to climate change, in line with the recommendations of the Taskforce on climate-related financial disclosures (TCFD) this is available at https://www.bt.com.au/content/dam/public/btfg-bt/documents/about-bt/corporate-sustainability/BTFG-climate-related-disclosures.pdf


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.

Westpac and BT have a conflicts of interest policy that sets out the principles that BT follows for dealing with actual, potential or perceived conflicts that may arise. The policy describes how to:

  • Identify conflicts of interest;
  • Assess and evaluate those conflicts;
  • Implement appropriate responses; and
  • Maintain appropriate documentation.

In addition, this is supported by business procedures and a conflicts management framework which applies to BT entities, directors, employees, contractors and consultants.

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within investee entities.

04.2. Describe your process on managing incidents

BT is made aware of company incidents through various means, including news subscriptions, investment managers and service providers, such as Regnan, EOS at Federated  Hermes (EOS) and Sustainalytics. BT will consider the incident and, where an investment manager is exposed to the company, may request further information regarding our holding.

In certain circumstances, incidents may also be considered through our ESG Exclusions framework, which considers severe breaches of international norms such as the UN Global Compact principles where it is deemed not feasible to influence a company through engagement or proxy voting. More detail on our ESG Exclusions framework can be found in the BT Responsible Investment Position Statement, available at www.bt.com.au/sustainability.


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