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CBUS Superannuation Fund

PRI reporting framework 2020

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(Proxy) voting and shareholder resolutions

LEA 12. Typical approach to (proxy) voting decisions

12.1. Indicate how you typically make your (proxy) voting decisions.

Approach

Based on

12.2. Provide an overview of how you ensure that your agreed-upon voting policy is adhered to, giving details of your approach when exceptions to the policy are made.

Voting at company meetings is one way where the Fund can exercise its shareholder rights to influence and encourage better ESG practices among in the companies we invest in.

The Fund's voting practices domestically and internationally are predominantly based on the Australian Council of Superannuation Investors (ACSI) Corporate Governance Guidelines to ensure consistency of our voting process.

 ACSI’s Governance Guidelines can be found here:  https://acsi.org.au/wp-content/uploads/2020/01/ACSI-Governance-Guidelines-2019.pdf

In Australia, as a member of ACSI we actively contribute to the setting of the Governance Guidelines which we use to inform our voting decisions. By being a member of ACSI, we sign off on the Guidelines which give an ESG perspective on voting recommendations. ACSI’s Guidelines are used by management to arrive at their voting recommendations.

There are limited circumstances where the Fund cannot vote, and the Fund has a policy regarding stock lending as outlined in our Responsible Investment Policy.

Cbus’ voting positions are not considered in isolation, Cbus will consider engagement with companies, our managers and broader stakeholder views (where applicable). In all cases the Fund will make its voting decision based on the best long-term interests of members.

When a contentious issue arises, the Fund will seek a range of inputs and will consider engagement progress and outcomes. Examples of contentious issues include:

  • Shareholder proposals
  • High profile external events
  • AGMs classified as having contentious resolutions by the proxy voting service provider CGI Glass Lewis or ACSI

We use a third party service provider to execute proxy voting based on our own voting policy. We are able to track voting outcomes based on the criteria set by Cbus. In addition our voting approach and criteria is approved annually by the Investment Committee with weekly and monthly voting reports are provided.

12.3. Additional information.[Optional]


LEA 13. Percentage of voting recommendations reviewed (Not Applicable)


LEA 14. Securities lending programme

14.1. Does your organisation have a securities lending programme?

14.3. Indicate how the issue of voting is addressed in your securities lending programme.

14.4. Additional information. [Optional]

The Fund has designed a process that enables the investment team to recall a stock from loan on ASX companies to ensure that the security lending program does not prevent the Fund from exercising its voting rights as a shareholder. We can also recall shares in our global portfolio if required. 


LEA 15. Informing companies of the rationale of abstaining/voting against management

15.1. Indicate the proportion of votes participated in within the reporting year in which where you or the service providers acting on your behalf raised concerns with companies ahead of voting.

15.2. Indicate the reasons for raising your concerns with these companies ahead of voting.

15.3. Additional information. [Optional]

Prior to ACSI issuing voting recommendations to members, ACSI attempts to make contact with all companies, particularly if there is a controversial item or where ACSI may oppose the board on a resolution. We also receive information from Glass Lewis proxy advisor on global companies.


LEA 16. Informing companies of the rationale of abstaining/voting against management

16.1. Indicate the proportion of votes where you, and/or the service provider(s) acting on your behalf, communicated the rationale to companies for abstaining or voting against management recommendations. Indicate this as a percentage out of all eligible votes.

16.3. In cases where your organisation does communicate the rationale for abstaining or voting against management recommendations, indicate whether this rationale is made public.

16.4. Additional information. [Optional]


LEA 17. Percentage of (proxy) votes cast

17.1. For listed equities in which you or your service provider have the mandate to issue (proxy) voting instructions, indicate the percentage of votes cast during the reporting year.

Votes cast (to the nearest 1%)

98 %

Specify the basis on which this percentage is calculated

17.2. Explain your reason(s) for not voting on certain holdings

17.3. Additional information. [Optional]


LEA 18. Proportion of ballot items that were for/against/abstentions

18.1. Indicate whether you track the voting instructions that you or your service provider on your behalf have issued.

18.2. Of the voting instructions that you and/or third parties on your behalf have issued, indicate the proportion of ballot items that were:

Voting instructions
Breakdown as percentage of votes cast
For (supporting) management recommendations
82.57 %
Against (opposing) management recommendations
15.68 %
Abstentions
1.80 %
100.05%

18.3. In cases where your organisation voted against management recommendations, indicate the percentage of companies which you have engaged.

100

18.4. Additional information. [Optional]

ACSI always attempts to contact companies before publishing an against management recommendation to discuss the resolution.  Where a meeting is  contentious or is a large holding we will advise the company where we have not supported a resolution.


LEA 19. Proportion of ballot items that were for/against/abstentions

19.1. Indicate whether your organisation has a formal escalation strategy following unsuccessful voting.

19.2. Indicate the escalation strategies used at your organisation following abstentions and/or votes against management.

19.3. Additional information. [Optional]


LEA 20. Shareholder resolutions

20.1. Indicate whether your organisation, directly or through a service provider, filed or co-filed any ESG shareholder resolutions during the reporting year.

20.7. Additional information. [Optional]


LEA 21. Examples of (proxy) voting activities

21.1. Provide examples of the (proxy) voting activities that your organisation and/or service provider carried out during the reporting year.

ESG Topic
Health and Safety
Conducted by
Objectives

Actively considered the implications of fatalities in voting activites.

Scope and Process

Where Cbus was aware of a fatality we considered the impact on short term incentives, level of disclosure, accountability and lessons learned from the tragic event and actively engaged to seek further information. Where there is insufficient disclosure or accountability we did not support the remuneration reports. 

Outcomes
ESG Topic
Climate Change
Conducted by
Objectives

ACSI seeks companies disclose reliable and sufficiently granular information for investors in line with the TCFD Framework that provides insights into how the company manages climate risks and how they are resilient under a low carbon economy. ACSI assesses companies against the following areas:

  • Climate transparency, governance & policy
  • Transition risk management and disclosure
  • Physical risk management and disclosure
  • Paris-aligned targets
  • Just transition
  • Industry associations
Scope and Process

ACSI’s focus is on companies in the ASX300 who have a material exposure.

ACSI provides analysis on climate-related resolutions by analyzing the climate change disclosures by the company and engages on where improvements can be made often seeking commitments from the company ahead of the AGM. Depending on the company’s disclosures or commitments to improve ACSI will either recommend a vote in favour or against a shareholder proposal. In 2019, ACSI provided voting recommendations on 12 companies with climate-related resolution.

Outcomes
ESG Topic
Executive Remuneration
Conducted by
Objectives

Ensure alignment of executive and shareholder interests, and appropriate board oversight.

Scope and Process

ACSI provided our fund with voting advice on remuneration-related resolutions at each ASX300 company.

ACSI analyses the remuneration disclosures by the company and engages with the company on where improvements can be made or why remuneration was paid in certain outcomes.  Depending on the company’s disclosures, commitments to improve or discretion applied ACSI will either recommend a vote in favour or against.  

Outcomes
ESG Topic
Human rights
Conducted by
Objectives

To ensure these companies have adequate systems, policies and practices in place to monitor and modify contractor/supplier behaviors. This includes encouraging public disclosure of training efforts, auditing outcomes, lists of suppliers and engagement with Governments where issues are systemic.

Scope and Process

ACSI focus is on companies in the ASX200 who have a material exposure.

ACSI provides analysis on LHR-based shareholder resolutions in the Australian market. For 2019, ACSI provided analysis on one LHR-based shareholder resolution.

Outcomes
ESG Topic
Diversity
Conducted by
Objectives

Increase the representation of women on ASX300 company boards to 30%. Where companies fail to demonstrate a plan to reach 30% ACSI recommends votes against zero women boards.

Scope and Process

Of the 81 companies targeted at the start of 2019, 34 companies appointed a female director to their board. Our program included 75 meetings with these target companies and resulted in ACSI opposing 16 director re-elections as they failed to demonstrate a plan to reach 30% women on their board.

Outcomes
ESG Topic
Other governance
Conducted by
Objectives

Board composition and accountability:

Broadly, there are two objectives:

(1) Ensure appropriate board composition, including a majority of independent directors.

(2) Ensure board accountability to shareholders for past decisions.

Scope and Process

ACSI provides voting advice for the ASX300 on board composition and accountability (this includes diversity issues), via recommendations on director elections and re-elections.

Outcomes

21.2. Additional information. [Optional]

Our service provider ACSI makes all proxy voting recommendations in accordance with the Governance Guidelines which are created and approved by its members. 

ACSI informs companies of its voting recommendations before the meeting where there are contentious issues, and after the meeting for all companies. ACSI typically meets companies whose resolutions it opposed.

Cbus will contact companies pre or post vote when in members best interests.


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