As stewards of our members’ retirement savings, we have a duty to act in their best interests and to protect and grow the real value of their assets. FSS approaches ESG integration across the whole fund, via assessment of ESG integration and stewardship of our managers in the management selection phase, appointment and monitoring thereafter. Where possible, we attempt to educate our mainstream analysts and fund managers on ESG integration. For investments in the private equity or infrastructure assets classes where either FSS or our manager takes a board seat in an unlisted company, we ensure our ESG principles influence board decisions. For listed assets a critical part of this is a responsibility to monitor and engage with companies in which we invest, directly and through the fund managers we appoint. This is more than just voting. Activities may include monitoring and engaging with companies on matters such as strategy, performance, risk, and capital structure.
Perhaps most importantly, we have an obligation to ensure that the companies we invest in on behalf of members are governed in a way which will enhance their performance over the longer term.
We believe that good governance is essential to being able to generate the best financial outcome for members. We generally support boards that have a majority of independent directors and that contain a diverse set of experience and skills appropriate to the business.
Additionally, we take an interest in the environmental and social practices of the listed companies in which we invest. We believe companies that take a sustainable approach to the environment and to the community, including their own workforce, will perform better over the long term.
To improve our knowledge of ESG issues, which enters in to our ESG direct or co-investment reviews, corporate engagements, or proxy voting, we carry out in depth thematic research projects annually. We have completed projects on executive remuneration, climate change, worker safety, diversity and long term value creation. We participate in and are members of industry bodies such as PRI, RIAA, ACSI, Hermes Eos and IGCC, to ensure our work is benchmarked with our peers and to learn and provide information on our approach to ESG integrate and active ownership.