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You are in Indirect – Manager Selection, Appointment and Monitoring » Outputs and outcomes
Our asset consultant provides an ESG score / rating for our fund managers as per their annual review process. The RI team also participates in formal annual manager reviews in which the manager ESG benchmark score is discussed and focus areas for improvement are outlined. Where a manager's rating is not improving this may be escalated to the asset class head, as well as to the internal Risk & Compliance committee, where required.
Cbus is very active on individual company issues that arise during the year and engaging with fund managers on these. We use this also to test and compare the different information provided and the depth of information provided by fund managers.
Internal Risk committee and Investment committee oversight
Where a manager's rating is not improving this may be escalated to the asset class head, as well as to the internal Risk & Compliance committee. This may be raised as an investment risk issue to be tracked.
We are able to track private market ESG performance for infrastructure and property asset level through GRESB
ESG integration - climate change
All equity managers are required to include ESG factors in their investment decision making process. In the majority of cases, the Cbus RI team undertakes six monthly reviews of all manager's to assess their capabilities. Climate change is an ESG focus area.
The manager outlined their engagement with an oil and gas exploration company in order to better understand their potential GHG exposure as well as stranded asset risk. These are inputs into decision making. Climate change is a key ESG thematic being taken into consideration by the manager in investment research and decision making.
ESG integration- Human Capital Management
Cbus has a number of RI principles which all asset classes are required to be cognisant of when applying ESG integration. The RI team undertook a review of a presentation prepared by the internal equity team focused on a multinational company's labour practices. The internal equity team were required to present on the issue to multiple stakeholders.
The RI team gained were able to monitor the internal equity team's approach to integration of a priority Cbus ESG theme.
During a routine six monthly ESG review, an Australian equity manager outlined their approach to engagement and how it related to ESG material risks of portfolio.
The RI team observed the engagement themes did not relate to the material ESG risks in the portfolio. The fund manager was responsive and updated their approach.
Cbus monitors the requirement for all managers to integrate ESG considerations into the investment process. During a routine six monthly ESG review of an Australian corporate debt manager, their investment approach was tested as it was not clear from the answers contained in the previously completed Cbus ESG Manager Survey what their integration approach was.
The manager utilises SASB Materiality framework in order to assess the financially material ESG factors associated with corporate debt issuers across many sectors. The manager is also going to introduce ESG reporting in line with this framework.
Fund manager is increasing engagement in collaborative industry initiatives:
- Signatory to the UN PRI
- UK Stewardship Code 2020
- Active participant in market initiatives for increased disclosure
Fund managers has made concerted efforts to increase measuring and reporting on their ESG measures.
ESG incorporation in all investment decisions.
ESG examples - Positive and negative. How is ongoing ESG within investments managed?
Cbus engaged with its fund managers following fatalities at an asset held in pooled investments. This was raised and monitored by the Investment Committee including the reasons for the incident and steps taken to improve safety in the company.