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Australian Council of Superannuation Investors (ACSI)

Service Provider Reporting Framework 2017

You are in Strategy and Governance » Responsible investment policy

Responsible investment policy

SG 01. Responsible investment policy

01.1. Describe how your organisation’s philosophy incorporates environmental, social and governance factors, and the link to your business offerings.

          The Australian Council of Superannuation Investors (ACSI) is a collaboration of Australian and international asset owners who work collectively to address ESG risks and opportunities in the ASX300. 

ACSI believes ESG investment risks and opportunities are financially material for long-term oriented investors, ACSI therefore works with our member funds to help protect and manage their investments for the long-term through the consideration of environmental, social and corporate governance (ESG) risks in their investment decision-making processes. 

This is done via a multifaceted approach through thematic and longitudinal research, policy advocacy, company engagement and proxy voting. 

ACSI provides research on material ESG issues which supports our advocacy, engagement and voting programs. This includes long-running research into Executive Pay in the ASX200 and Sustainability Reporting Practices of the ASX200. All of ACSI’s research reports can be found here: https://acsi.org.au/publications-1/research-reports.html.
ACSI believes the formal and informal ownership rights that accrue to investors (in particular, voting rights and the ability to engage with investee companies) have genuine economic value, and their exercise can materially improve investment outcomes. Long-term investors, therefore, have a responsibility to exercise these ownership rights judiciously as part of their stewardship of assets on their beneficiaries’ behalves. 

ACSI’s engagement program seeks to influence companies through constructive engagement with their boards about material ESG issues, with the aim of promoting long-term shareholder value and minimising risk. This feeds into ACSI’s Australian Voting Alert Service (AVAS) where ACSI gives voting recommendations to members to help them exercise their shareholder rights and manage corporate governance risks in the companies in which they invest. ACSI’s Governance Guidelines and ESG Reporting Guide for Australian Companies can be found here: https://acsi.org.au/publications-1/acsi-governance-guidelines.html .
        

01.2. Indicate whether you have policies that formalise the incorporation of your beliefs in your business offerings.

01.3. Indicate the components/types  of your policy

Policy components/types

01.4. Indicate how these are put into practice internally across the organisation.

          Informs ACSI’s engagement and voting programs
        

01.5. Additional information [OPTIONAL]

ACSI’s Governance Guidelines and ESG Reporting Guide for Australian Companies informs our company engagement program and proxy voting. The documents can be found here: https://acsi.org.au/publications-1/acsi-governance-guidelines.html


SG 02. Publically available policies

02.1. Indicate which of your policy documents or statements (if any) are publicly available. Provide the URL and an attachment of the document.

Policy or document name

02.2. Additional information. [OPTIONAL]

ACSI/FSC ESG Guide, https://acsi.org.au/images/stories/ACSIDocuments/ESG_Reporting_Guide_Final_2015_single_page.pdf 


SG 03. Norms used to develop policies

03.1. Indicate what standards you have used to develop your organisation’s policies. Tick all that apply.


SG 04. Policy offerings to clients

04.1. Indicate whether you offer any of the following policies to clients.

Off the shelf
Tailored
Asset class-specific RI guidelines
Sector-specific RI guidelines
Screening/exclusions policy
Engagement policy
(Proxy) voting policy
RI guidelines set out within the Investment Policy Statement (IPS)
RI guidelines set out in a freestanding RI policy
Multi-year RI implementation project plan
Conflict of interest management policy
Stockbroker allocation policy
Securities lending policy
Other, please specify (1)
Other, please specify (2)
Other, please specify (3)
None of the above

04.2. Provide a brief description of the key elements, any variations, or exceptions applying to these policies.

N/A


SG 05. ESG/RI in business offerings

05.1. Describe how you include ESG/RI factors as an integral part of your business offerings.

Business area

Stewardship Services

How you include ESG/RI factors

ACSI provides stewardship services to our members through our advocacy, engagement  and proxy voting programs.

ACSI’s engagement program is seen through active engagement with ASX300 boards about material ESG issues, with the aim of promoting long term shareholder value and minimising risk.

ACSI’s Australian Voting Alert Service (AVAS) provides recommendations for proxy voting on ASX300 companies to our member funds on ESG risks and opportunities. This is interlinked with the company engagement program and research programs which feed into ACSI’s voting recommendations to members to help them exercise their shareholder rights and manage corporate governance risks in the companies in which they invest.

ACSI’s Governance Guidelines and ESG Reporting Guide for Australian Companies can be found here: https://acsi.org.au/publications-1/acsi-governance-guidelines.html .

Research and Data Provision

How you include ESG/RI factors

ACSI provides research and data provisions on material ESG issues which supports our advocacy, engagement and voting programs. This includes long-running research into Executive Pay in the ASX200 and Sustainability Reporting Practices of the ASX200. The research and data analysis helps develop ACSI’s priority company engagements and research papers.   

All of ACSI’s research reports can be found here: https://acsi.org.au/publications-1/research-reports.html.


SG 06. Outsourcing of services (Private)


SG 06.2. Outsourcing of services (Private)


SG 07. Providing training/education

07.1. Indicate whether you provide training/educational services on ESG/RI. Tick all that apply.

07.2. Describe the main components of your training/educational services on ESG/RI and any variations depending on the group you provide training/education to.

ACSI hosted multiple educational seminars, an annual conference addressing current and long-term ESG issues and held a Trustee delegation to the PRI in Person in Singapore. 

ACSI’s educational seminars and conference have a broad audience and are targeted towards a diverse group of workers in the financial services space including investment managers, governance specialists, investment analysts, board members and trustees etc.

ACSI also holds smaller educational seminars that focused on; responsible investment and engagement by overseas pension funds, carbon asset risks and Australia’s exposure, integrated reporting and whistleblowing. Most of the participants in these seminars are from the investment departments of funds, but does have good attendence from board members.

Specific to the training of trustees and boards, ACSI provides ESG training as a part of AIST’s Trustee Director Course. This is used to give superfund trustees a basic understanding of ESG factors as material investment issues, the risks and opportunities and the implementation of ESG policy and ESG integration.

Through this training, ACSI highlights the importance of ESG integration, active ownership, screening, exclusion and divestment and ESG themed investing alongside impact investing. The course gives Trustees an overall awareness of the ESG factors that influence their fiduciary responsibilities and the role of superfunds as universal investors.  

07.2. Describe the main components of your training/educational services on ESG/RI and any variations depending on the group you provide training/education to.

ACSI hosted multiple educational seminars, an annual conference addressing current and long-term ESG issues and held a Trustee delegation to the PRI in Person in Singapore. 

ACSI’s educational seminars and conference have a broad audience and are targeted towards a diverse group of workers in the financial services space including investment managers, governance specialists, investment analysts, board members and trustees etc. 

ACSI also holds smaller educational seminars that focused on; responsible investment and engagement by overseas pension funds, carbon asset risks and Australia’s exposure, integrated reporting and whistleblowing. Most of the participants in these seminars are from the investment departments of funds, but does have good attendence from board members.


SG 08. Level of involvement in collaborative organizations and/or initiatives

08.1. Select the collaborative organisation and/or initiatives of which your organisation is a member, or in which it participated during the reporting year and the role you played.

Collaborative Organisation/Initiative

Provide a brief commentary on the level of your organisation’s involvement in the initiative [OPTIONAL]

          ACSI became a signatory to the United Nations-backed Principles for Responsible Investment (PRI) in October 2006, and is an active participant in the PRI’s global and regional activities.

We encourage our members to sign up to the PRI, as many have done, and we assist them in implementing the Principles, where consistent with their fiduciary responsibilities.

Our services include:
•	Assisting members to incorporate ESG issues into investment analysis and decision-making processes
•	Assisting members to be active owners and incorporate ESG issues into our ownership policies and practices
•	Encouraging appropriate disclosure on ESG issues by S&P/ASX 200 companies in which our members invest
•	Promoting acceptance and implementation of the Principles within the investment industry
•	Working together to enhance our effectiveness in implementing the Principles
•	Assisting members to report on their activities and progress towards implementing the Principles.
        
          Investor Group on Climate Change (IGCC)
        

Provide a brief commentary on the level of your organisation’s involvement in the initiative [OPTIONAL]

          ACSI works in collaboration with the IGCC on climate change and carbon risk, representing the views of institutional investors. ACSI is an active contributor to climate change discussion, both in its own capacity and as a member of the IGCC, and has worked closely with IGCC on information sharing, research and joint policy submissions.
        
          International Corporate Governance Network (ICGN)
        

Provide a brief commentary on the level of your organisation’s involvement in the initiative [OPTIONAL]

          ACSI has been a long–time supporter of the ICGN and is part of a number of ICGN working groups.
        
          Integrated Reporting (IR)
        

Provide a brief commentary on the level of your organisation’s involvement in the initiative [OPTIONAL]

          ACSI is a supporter of Integrated Reporting and ACSI's CEO is on the Integrated Reporting board. As a part of ACSI's research program, we monitor the use of Integrated Reporting in the ASX300.
        

08.2. Additional information. [OPTIONAL]


SG 09. Applying, advancing and promoting the PRI principles

09.1. Describe how your organisation applies, advances and promotes the PRI Principles.

ACSI has been a signatory to the United Nations-backed Principles for Responsible Investment (PRI) since October 2006, and is an active participant in the PRI’s global and regional activities.

ACSI encourages our members to sign up to the PRI, and we assist them in implementing the Principles, where consistent with their fiduciary responsibilities.

Our services include:

- Assisting members to incorporate ESG issues into investment analysis and decision-making processes
- Assisting members to be active owners and incorporate ESG issues into our ownership policies and practices
- Encouraging appropriate disclosure on ESG issues by S&P/ASX 200 companies in which our members invest
- Promoting acceptance and implementation of the Principles within the investment industry
- Working together to enhance our effectiveness in implementing the Principles
- Assisting members to report on their activities and progress towards implementing the Principles.

09.2. Highlight whether there are any ways that your organisation would like to engage further with the PRI. [OPTIONAL]


SG 10. Actions taken to promote responsible investment

10.1. Indicate which of the following actions your organisation has taken to promote responsible investments, independently of collaborative initiatives.

10.2. Additional information. [OPTIONAL]


SG 11. Long term trends

11.1. Indicate which of the following long-term trends are addressed in your product outputs.

11.2. Explain how this long term trend affects your product outputs.

Changing demographics is a front of mind issue for ACSI's members, being in the superannuation industry, and ACSI is an active contributor to the conversation on how to manage the risks in demographic shifts. ACSI raises demographic change in the context of discussions about company strategy in out engagement program.

11.2. Explain how this long term trend affects your product outputs.

ACSI considers climate change as a long-term risk, and opportunity, for our member funds and the ASX300 companies with which we engage on their behalf. ACSI actively seeks climate change risk integration into scenario and strategic planning by the ASX300 companies, and has been engaging with larger domestic listed companies in the energy, resources and banking sectors on their behalf over the last two years. ACSI is encouraging those companies to incorporate consideration of climate change risks and opportunities into their business, as well as public disclosure and discussion of their policies and activities as they relate to climate change.

11.2. Explain how this long term trend affects your product outputs.

ACSI considers resource scarcity as an interlinked long-term risk with climate change, and engages with relevant companies in the ASX300 on behalf of members. Similar to ACSI's climate change agenda, ACSI has been engaging with larger domestic listed companies in the energy, resources and banking sectors for a number of years on the topic. 


SG 12. Business certifications/accreditations (Not Completed)


SG 13. Interaction with asset owners

13.1. Indicate whether you interact with asset owner clients.

13.2. Indicate the typical frequency and type of interactions with your asset owner clients.

Type of interaction

Frequency

          on request
        

Frequency

          as required
        

Frequency

          at least half-yearly
        

Frequency

Frequency

13.3. Tick boxes across level of employment of investor contact (C-level, PM etc.) and subject areas typically addressed with the contact(s).

Level of employment

Subject area(s)

          Responsible investment, proxy voting, priority company engagement, ASX300 engagement, ESG based research , ESG risks.
        

Subject area(s)

          Responsible investment, proxy voting, priority company engagement, ASX300 engagement, ESG based research , ESG risks.
        

Subject area(s)

          Responsible investment, proxy voting, priority company engagement, ASX300 engagement, ESG based research , ESG risks.
        

Subject area(s)

          Responsible investment, proxy voting, priority company engagement, ASX300 engagement, ESG based research , ESG risks.
        

Subject area(s)

          Responsible investment, proxy voting, priority company engagement, ASX300 engagement, ESG based research , ESG risks.
        

Subject area(s)

          Responsible investment, proxy voting, priority company engagement, ASX300 engagement, ESG based research , ESG risks.
        

Subject area(s)

          Investment beliefs, ESG Policy, active ownership strategies, proxy voting policies, contentious investment issues etc.
        

SG 14. Aligning approach with investor goals

14.1. Describe how you align your organisation’s philosophy on and approach to ESG/RI with investor goals.

          ACSI’s approach to ESG and responsible investment is driven by a number of areas. The overall direction of ACSI’s research and priority-company engagement is determined by issues that arise out of current long-term themes such as climate change, issues that arise out of the previous year’s proxy voting or from NGOs, ASX300 company exposure to ESG risks, and research topics. 

ACSI’s approach is adapted by our members when ACSI seeks approval for the coming year’s ESG approach, and on an ad-hoc basis throughout the year. This allows our members who see certain issues in the market to adapt and add to ACSI’s overall direction each year.

Refer to indicator 14.2 for the actions to align ACSI’s philosophy and approach to ESG with our members’ goals.
        

14.2. Additional information. [OPTIONAL]

Actions to align ACSI’s philosophy and approach to ESG with our members’ goals ACSI provides services in the following areas. 

Active ownership

ACSI assists funds to exercise their responsibility of active ownership and stewardship of the shares they own within the ASX300 through company engagement, proxy voting analysis and advice.

Providing Governance Guidelines for funds on how to exercise votes on key governance issues such as board independence, gender diversity, executive remuneration etc., assists members to be active owners and incorporate ESG issues into their ownership policies and practices. The Guidelines also detail  the reasonable expectations of asset owners for governance standards that should be adopted by listed investee companies, and under which sustainable long-term investment can prosper.

ACSI Governance Guidelines: https://acsi.org.au/images/stories/ACSIDocuments/ACSI_Governance_Guidelines.Oct15.pdf 

Enhance sustainable long-term value for retirement saving

ACSI assists members to incorporate ESG issues into investment analysis and decision-making processes by providing ESG thematic research and ASX300 company engagement and analysis on ESG risks to assist investor goals to achieve long-term value creation.

Work in the best interests of long-term fiduciary asset owners and their beneficiaries

ACSI engages with policy makers through advocacy on behalf of members and through policy submissions to government to better align the operation of the financial system with the financial interests of our members (as long-term fiduciary asset owners) and their beneficiaries, which typically span many decades.

ACSI policy submissions: https://acsi.org.au/publications-1/policy-submissions.html 

Employ responsible investment

By identifying ESG risks and opportunities in the ASX300 through longitudinal and thematic research, company engagement and proxy voting.

 


SG 15. ESG recommendations not aligned with investor goals

15.1. Describe what steps you take, if any, when your ESG recommendations are not in line with investor goals.

15.2. Additional information. [OPTIONAL]

ACSI’s ESG approach is overseen by Member Council, in consultation with Management. Its members actively contribute and set the goals and direction ACSI takes – therefore eliminating the issue of values and goals misalignment. In regards to ACSI’s proxy-voting recommendations, members can choose not to follow them depending on their internal goals. 


SG 16. Seeking feedback from clients

16.1. Indicate whether you seek feedback from clients on your RI/ESG services and product offerings

16.2. Describe how you use this feedback on your RI/ESG services and product offerings.

ACSI’s engagement and research is driven by representatives of our member funds through our Member Council. Through this, the setting of objectives, research topics and engagement priorities, the Member Council is able to give feedback and change some of the services ACSI provides.

ACSI also encourages to members to participate in a review of its Guidelines every two years, to ensure they are still relevant and appropriate to member aims.


SG 17. Managing conflicts of interest

17.1. Indicate whether your organisation has a policy for managing potential conflicts of interest.

17.2. Describe how you manage potential conflicts of interest.

ACSI has formal policies to deal with potential conflicts of interest. 

17.3. Describe how you ensure that company employees do not derive any personal gain from the use of information collected during your work process.

ACSI has a Staff Securities Trading Policy which deals with inside trading for its employees and their close associates. Employees are prohibited from trading in securities of any entity covered by ACSI’s voting research during designated blackout periods. Employees must notify the Company Secretary and disclose any relevant holdings twice-yearly, with disclosure provided in writing no more than 30 calendar days after 1 January and 1 July each year.


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