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CBUS Superannuation Fund

PRI reporting framework 2020

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You are in Indirect – Manager Selection, Appointment and Monitoring » Selection

Selection

SAM 02. Selection processes (LE and FI)

02.1. Indicate what RI-related information your organisation typically covers in the majority of selection documentation for your external managers

Your organisation’s investment strategy and how ESG objectives relate to it

ESG incorporation requirements

ESG reporting requirements

Other

No RI information covered in the selection documentation

LE

FI - SSA
FI - Corporate (non-financial)
FI - Securitised
Private equity
Property
Infrastructure
Your organisation’s investment strategy and how ESG objectives relate to it
ESG incorporation requirements
ESG reporting requirements
Other
No RI information covered in the selection documentation

02.2. Explain how your organisation evaluates the investment manager’s ability to align between your investment strategy and their investment approach

Strategy

Assess the time horizon of the investment manager’s offering vs. your/beneficiaries’ requirements

Assess the quality of investment policy and its references to ESG

Assess the investment approach and how ESG objectives are implemented in the investment process

Review the manager’s firm-level vs. product-level approach to RI

Assess the ESG definitions to be used

Other

None of the above

LE

FI - SSA
FI - Corporate (non-financial)
FI - Securitised
Private equity
Property
Infrastructure
Assess the time horizon of the investment manager’s offering vs. your/beneficiaries’ requirements
Assess the quality of investment policy and its reference to ESG
Assess the investment approach and how ESG objectives are implemented in the investment process
Review the manager’s firm-level vs. product-level approach to RI
Assess the ESG definitions to be used
Other
None of the above

ESG people/oversight

Assess ESG expertise of investment teams

Review the oversight and responsibilities of ESG implementation

Review how ESG implementation is incentivised

Review the manager’s RI-promotion efforts and engagement with the industry

Other

None of the above

LE

FI - SSA
FI - Corporate (non-financial)
FI - Securitised
Private equity
Property
Infrastructure
Assess ESG expertise of investment teams
Review the oversight and responsibilities of ESG implementation
Review how is ESG implementation enforced /ensured
Review the manager’s RI-promotion efforts and engagement with the industry
Other
None of the above

Process/portfolio construction/investment valuation

Review the process for ensuring the quality of the ESG data used

Review and agree the use of ESG data in the investment decision making process

Review and agree the impact of ESG analysis on investment decisions

Review and agree ESG objectives (e.g. risk reduction, return seeking, real-world impact)

Review and agree manager’s ESG risk framework

Review and agree ESG risk limits at athe portfolio level (portfolio construction) and other ESG objectives

Review how ESG materiality is evaluated by the manager

Review process for defining and communicating on ESG incidents

Review and agree ESG reporting frequency and detail

Other, specify

None of the above

LE

FI - SSA
FI - Corporate (non-financial)
FI - Securitised
Private equity
Property
Infrastructure
Review the process for ensuring the quality of the ESG data used
Review and agree the use of ESG data in the investment decision making process
Review and agree the impact of ESG analysis on investment decisions
Review and agree ESG objectives (e.g. risk reduction, return seeking, real-world impact)
Review and agree manager’s ESG risk framework
Review and agree ESG risk limits at athe portfolio level (portfolio construction) and other ESG objectives
Review how ESG materiality is evaluated by the manager
Review process for defining and communicating on ESG incidents
Review and agree ESG reporting frequency and detail
Other, specify
None of the above

If you select any `Other` option(s), specify

 

 

 

02.3. Indicate the selection process and its ESG/RI components

02.4. When selecting external managers does your organisation set any of the following:

ESG performance development targets

ESG score

ESG weight

Real economy influence

Other RI considerations

None of the above

LE

FI - SSA
FI - Corporate (non-financial)
FI - Securitised
Private equity
Property
Infrastructure
ESG performance development targets
ESG score
ESG weight
Real world economy targets
Other RI considerations
None of the above

You selected an `Other` option in table SAM 02.4 above, please specify

The process is three fold:

- work with our asset consultant. Frontier provides ESG ratings for each of our managers and those we are looking to appoint. The majority of our managers are 3 stars or above (out of 5) for ESG.

- Cbus RI team issue ESG questions

- review information we have obtained during our selection process.

Following a review of information provided by the shortlisted managers, the team will determine the credibility of the manager in respect of ESG. The RI team will provide a comment as to supporting or not supporting the manager appointment. Each Manager in each asset class is provided with the same questions (leveraging the PRI DDQs where available).

If the fund manager is not strong on ESG, there will be a discussion with the fund manager if they are willing to work with Cbus to develop this capability. If they are, Cbus may still appoint the manager with additional ESG requirements specified in the mandate.

In relation to property and infrastructure Cbus encourages existing and prospective property fund managers to set ESG targets and a GRESB signatory. For example, net zero emissions by 2030.

02.5. Describe how the ESG information reviewed and discussed affects the selection decision making process.[OPTIONAL]

          Two processes combine to form a view on manager selection.
1. Listed equities team - when reviewing managers long list, ESG is a key consideration and factored into the research. This is captured within the meeting notes and the Manager Appointment Memo.  There is also an explicit ESG section in the long/short listing templates.  
2. When managers are shortlisted, the responsible investment team undertake a due diligence on ESG. 
The teams then work together to form a view on the managers approach to ESG. This follows detailed document review, manager interviews and third party information. 

The ESG due diligence covers both fund manager approach to ESG at firm and product level across process and performance. It includes elements outlined below. Following this, fund managers are ranked against total portfolio and then asset class peers to determine their comparable position and strengths and areas for improvement within the total portfolio. An engagement plan will be developed if areas of improvement are identified.  
Due diligence areas of focus: 
- policies
- reporting
- integration
-remuneration and training 
- collaboration
- climate change
- stewardship (engagement and voting)
- accountability
        

SAM 03. Evaluating engagement and voting practices in manager selection (listed equity/fixed income)

03.1. Indicate how your organisation typically evaluates the manager’s active ownership practices in the majority of the manager selection process.

Engagement

Review the manager’s engagement policy 1

Review the manager’s engagement process (with examples and outcomes)

Ensure whether engagement outcomes feed back into the investment decision-making process

Other engagement issues in your selection process specify

LE

FI - Corporate (non-financial)
FI - Securitised
Review the manager’s engagement policy
Review the manager’s engagement process (with examples and outcomes)
Ensure whether engagement outcomes feed back into the investment decision-making process
Other engagement issues in your selection process specify

If you select `Other` option, specify

          Outline the CBUS priority ESG themes such as modern slavery. This ensures the manager is aware of key topics we will be seeking feedback on.
        

03.2. Describe how you assess if the manager’s engagement approach is effective.

03.4. Additional information [OPTIONAL]

          We meet with our managers to discuss how they approach engagement, ESG materiality, objective setting and tracking outcomes.
        

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