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Australian Council of Superannuation Investors (ACSI)

Service Providers Framework 2020

You are in Strategy and Governance » Policy on ESG beliefs

Policy on ESG beliefs

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/research-reports/

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/governance-guidelines/

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

01.3. Indicate the components/types of your internal policy and provide the URL and/or an attachment of the document/s if they are publicly available.

Policy components/types

Public availability

Public availability

Public availability

Public availability

Public availability

Public availability

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/governance-guidelines/


SG 02. Norms used to develop policies

02.1. Indicate what frameworks and guidelines you have used to develop your organisation’s policies. Tick all that apply.

02.2. Additional information. [OPTIONAL]


SG 03. Policy offerings to clients

03.1. Indicate whether you offer standard, off the shelf, policies to clients as part of your product offerings, and/or whether you create tailored versions for individual 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

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

ACSI's core business activity is providing research, advocacy, company engagement and proxy voting recommendations on ESG risks and opportunities in the ASX300, therefore, ESG factors and RI-considerations are incorporated into all of the services we provide our members.

03.3. Additional information. [OPTIONAL]


SG 04. ESG/RI in business offerings

04.1. Briefly describe how you include ESG/RI factors as part of your business offerings.

Business area

Active Ownership Services

How you include ESG/RI factors

ACSI members, as long-term investors, have a responsibility to be active stewards of assets on their beneficiaries' behalves and ACSI assists funds to exercise this responsibility of active ownership and stewardship within the ASX300 through company engagement, proxy voting analysis, research and advocacy. We assist members exercising their ownership rights through voting and the ability to engage with investee companies, alongside longitudinal and bespoke research on ESG themes.

Our engagement program is done through active engagement with ASX300 boards about material ESG issues, with the aim of promoting long term shareholder value and minimising risk.Additionally, ACSI's Australian Voting Alert Service (AVAS) provides recommendations for proxy voting on ASX300 companies to our member funds. This is interlinked with the company engagement and research programs which feed into ACSI's voting recommendations to help members exercise their ownership 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/governance-guidelines/

Investment Consultancy

How you include ESG/RI factors

ACSI works with funds to develop policies and strategies which meet their needs, whatever their size, investment approach and resourcing. Examples may include:

  • ESG workshops
  • ESG Policy
  • ESG strategy development
  • Climate Change Policy
  • Voting Policy
  • Stewardship Strategy
  • ESG and investment research
  • ESG and stewardship member communications
  • Annual ESG program monitoring and evaluation

We can also assist funds evaluate the effectiveness of their existing approach, including manager evaluations, ESG data or service provider analysis. Our approach is highly collaborative, and we work closely with the fund to determine its needs.

Research and Data Provision

How you include ESG/RI factors

ACSI provides research and data on material ESG issues which supports our advocacy, engagement and voting programs. This includes long-running thematic research into Executive Pay in the ASX200 and Sustainability Reporting Practices of the ASX200 as well as individual company reports as part of our AVAS proxy voting service. The research and data analysis helps develop ACSI's priority company engagements and research papers.

Alongside longitudinal research papers, ACSI does focused research on topical issues like climate change transition risks, culture, safety, and capital raising practices.

All of ACSI's research reports can be found here: https://acsi.org.au/research-reports/

 

04.2. Indicate the roles in your organisation, and indicate for each whether they have oversight and/or implementation responsibilities for ESG/RI within the organisation.

Roles present in your organisation
Oversight/accountability for ESG/RI
Implementation of ESG/RI
Board
Directors
Chief Executive Officer (CEO), Chief Financial Officer (CFO)
Chief Operating Officer (COO), Chief Information Officer (CIO)
Other chief-level staff
Other heads of department

Please specify

          Executive Management level
        

Please specify

          Executive Management level
        
Dedicated ESG/RI staff
Other role, specify (1)
Other role, specify (2)
Other role, specify (3)
None of the above

04.3. Indicate how you ensure ESG/RI expertise for the roles where there are RI oversight/accountability or implementation responsibilities.

04.4. Indicate whether your organisation has any ESG/RI linked incentives for its employees.

04.7. Additional information [OPTIONAL]


SG 05. Outsourcing of services (Private)


SG 06. Providing training/education

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

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

Each year ACSI hosts multiple educational seminars and an annual conference addressing current and long-term ESG issues. These do not form formal training or form part of any certiification. 

ACSI's educational seminars and conference have a broad audience and are targeted towards a diverse audience in financial services including investment managers, governance specialists, investment analysts, listed company board members and pension/superannuation fund trustees.

06.3. Describe whether these training/educational services include any commercial elements.

          The ACSI Conference has sponsors but they form no part of the program. Otherwise, there are no commercial elements to these services.
        

06.4. Additional information. [OPTIONAL]


SG 07. Applying, advancing and promoting the PRI principles

07.1. 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.

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


SG 08. Actions taken to promote responsible investment

08.1. Indicate which of the following actions your organisation has taken to promote responsible investments during the reporting year, independently of collaborative initiatives.

08.2. Additional information. [OPTIONAL]


SG 09. Long term trends

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

09.2. 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 our engagement program.

09.2. Explain how this long-term trend affects your product outputs.

ACSI considers climate change as a long-term fianncial risk and opportunity, for both our member funds and the ASX300 companies with which we engage on their behalf. ACSI actively seeks climate change risk integration by ASX300 companies, and has been engaging with companies in the energy, resources, transport,  insurance and banking sectors on their behalf over the last three years and more broadly in the ASX300. ACSI is encouraging those companies to incorporate consideration of climate change risks and opportunities into their business, as well as adopting the Task Force on Climate-related Financial Disclosure framework and discussion of their policies and activities as they relate to climate change. Additionally, ACSI provides research papers on climate related dsiclosure in the ASX200 and began in 2019 a transition risk paper which will be avaliable in early 2020. 

09.2. Explain how this long-term trend affects your product outputs.

ACSI considers issues such as 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, transport, insurance and banking sectors for a number of years on the topic.

09.2. Explain how this long-term trend affects your product outputs.

Technology developments and its effect on employees within listed companies is an emerging issue that ACSI is keenly aware of and looking to engage listed companies on. ACSI is currently undertaking analysis on human capital risks in the ASX200 - this includes issues like changing workforces from technology developments and automation, training and re-training, turnover and staff engagement and mental health and transition programs. Additionally, ACSI has a gormal engagement program for 'Just Transitions' for coal companies which invovled engaging those companies on how they are managing the transition for employees and communities. 


SG 10. Interaction with asset owners

10.1. Indicate whether you interact with asset owner clients.

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

Type of interaction

Frequency

Frequency

Frequency

Frequency

Frequency

10.3. Additional information. [OPTIONAL]


SG 11. Aligning approach with investor goals

11.1. Describe how you typically align your organisation’s philosophy and approach to ESG/RI with your investor clients’ goals.

ACSI is aligned through our membership and governance structure. Our members are all asset owner investors (or in some cases entities wholly owned/controlled by asset owners). This means that our governance structure and strategic direction comes exclusively from asset owner investors. ACSI is a not-for-profit entity and has no other shareholders or groups with explicit power to guide our strategy. So our members dominate all our key decision-making groups (namely our Board and Member Council), and thus ensure strong alignment between ACSI's philosophy and investor goals.

Refer to indicator 11.2 for the actions to align ACSI's philosophy and approach to ESG with our members' goals.

11.2. Additional information. [OPTIONAL]

ACSI provides services in the following areas:

Active ownership

ACSI assists funds to exercise their responsibility of active ownership and stewardship of their ASX300 holdings through company engagement, proxy voting analysis and advice.

Providing Governance Guidelines on governance issues such as board independence, gender diversity and remuneration 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.

ACSI Governance Guidelines: https://acsi.org.au/images/stories/ACSIDocuments/ACSI-Governance-Guidelines.Nov17.pdf

Enhance sustainable long-term value for retirement savings

ACSI assists members to incorporate ESG issues into investment decision-making by providing thematic research and ASX300 company engagement and analysis on ESG risks.

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

ACSI engages with policy makers through advocacy 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

Encourage responsible investment

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

 


SG 12. ESG recommendations not aligned with investor goals

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

12.2. Additional information. [OPTIONAL]

ACSI's ESG approach is overseen by our 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.

Refer to SG 11.1 regarding ACSI’s structure for more information.


SG 13. Seeking feedback from clients

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

13.2. Describe how you use this feedback in your RI/ESG services and product offerings.

ACSI's engagement and research is driven by representatives of our member funds through our Member Council. This body sets ACSI’s strategy, objectives, research topics and engagement priorities, and so is able to change the services ACSI provides.

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

ACSI Governance Guidelines: https://acsi.org.au/publications/governance-guidelines/


SG 14. Managing conflicts of interest

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

14.2. Describe how you manage potential conflicts of interest.

ACSI has formal policies to deal with potential conflicts of interest. Our Code of Conduct is publicly disclosed at: https://acsi.org.au/about/corporate-documents/

14.3. 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. There are also restrictions in employees’ ability to participate in work relating to companies where they have a personal interest.

14.4. Additional information. [OPTIONAL]


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