Socially Responsible Investing Approach
AvSuper is committed to delivering the best possible retirement outcomes to members. We work to ensure that the investment assets we manage today can deliver strong investment returns in future. At AvSuper, we understand our responsibility to factor the various financial risks affecting your super into our investment strategy. This includes a range of financial risks that are commonly referred to as socially responsible investing.
By law, super funds have a fiduciary duty to maximise members’ financial returns and do not have to take into account labour standards or environmental, social or ethical considerations in the selection, retention or realisation of investments.
Nevertheless, the AvSuper Trustee always works in the best interests of members, keeping a medium to long term focus, and endeavours to incorporate socially responsible investing principles (also known as ESG) into our investment processes when practicable.
What is socially responsible investing?
Responsible investing, also known as green, ethical, sustainable or ESG (Environmental, Social and Governance) investing, much like other traditional investment styles, aims for consistent, long term investment returns.
Responsible investment consideration for selecting an investment can include factors such as environmental impact, human rights, ethics and governance issues. More recently, consideration of climate related risks has been recognised as an important emerging environmental issue facing long term investors like super funds.
What about UNPRI?
In 2005, the United Nations Principles for Responsible Investing (UNPRI) were developed. The AvSuper Trustee supports the development of such investment frameworks for considering responsible investment issues. Additionally, we continue to work towards introducing and maintaining appropriate and effective responsible investment practices into our general operations. The Trustee encourages our investment managers to consider UNPRI’s principles, and many of them are current signatories to these.
AvSuper’s socially responsible investment approach
AvSuper is committed to continually reviewing, building and improving our investment processes and disclosure on ESG responsible investment issues. We actively engage with our investment managers on the various socially responsible investing risks, including climate related risks, to analyse and understand the impact on our investments in order to weigh the risks and potential returns to determine the appropriate level of exposure.
AvSuper employs investment managers that are capable of quickly adapting to change which takes all these issues into consideration.
AvSuper does not currently offer an investment option which is purpose built for responsible investment. However, we undertake a range of ESG investing practices across our entire investment portfolio. Many of our investment managers, particularly those investing in share markets and real assets (property and infrastructure), use socially responsible investment considerations (to varying degrees) in meeting their specific investment (financial) objectives which contribute to the overall performance for AvSuper’s investments.
The Trustee’s main long-term objective is to maintain and enhance the purchasing power of all AvSuper members’ retirement savings.
Implementing responsible investing
AvSuper’s appointed investment managers may undertake socially responsible investing in accordance with their own criteria and methodologies. This commonly includes utilising internal screening processes to identify companies that rate poorly or highly for specified criteria.
Screening may start at an industry level or be done predominantly for individual companies. The process can include factors such as labour standards, ethical services/products (for example avoiding significant involvement in uranium and weapons), environment issues (renewable energy vs logging for instance) and human rights.
Generally, the process reviews the company’s relationship with its various ‘stakeholders’ (shareholders, society, the environment, suppliers, customers and employees) in order to identify risks and opportunities that influence long term corporate profitability.
Active Share Ownership
As a shareholder in Australian companies, AvSuper has the opportunity to vote on issues relating to socially responsible investment matters.
The Trustee deals with such considerations as is appropriate in line with its duties as a Trustee responsible for managing the retirement savings for all AvSuper members. There is no predetermined policy on applying or monitoring ethical, social or environmental considerations as each situation is different. The Trustee requires that votes are always made having regard to the best financial interests of members.
Climate Related Risks
We acknowledge that climate related risks are increasingly recognised as an important emerging financial risk facing long term investors like AvSuper, thus it is a very important part of our investment strategy. AvSuper actively considers and manages climate risk and opportunities.
Understanding these risks to our investment is an important first step, ie the physical impacts of climate change. We’re undertaking a high-level risk impact assessment on our total portfolio with a view to making our investments resilient to the effects of climate change. We also actively work with our fund managers to understand the impact of climate related risks on our portfolio. Finally, we seek appropriate investments in renewables, which we expect to deliver long-term returns to members, and have invested in renewable energy assets throughout the world, including investments in Australia and overseas.
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