Socially Responsible Investing
By law, super funds have a fiduciary duty to maximise members’ financial return and do not have to take into account labour standards or environmental, social or ethical considerations in the selection, retention or realisation of investments, nor is it required for any underlying investment managers.
Nevertheless, your Trustee works in the best interests of members at all times, keeping a medium to long term focus, and endeavours to incorporate broader socially responsible principles to our investment processes when practicable.
What is SRI?
Socially responsible investing (or SRI), also known as green, ethical or sustainable investing, much like other traditional investment styles, aims for consistent, long term investment returns.
SRI consideration in selecting an investment can include factors such as environmental impact, human rights, ethics and governance issues. Additional investments in these socially responsible companies and projects may enable them to continue and grow which may lead to an environmentally and socially sustainable world. Alternatively, not investing and screening out of these investments may promote a restricted investment philosophy. Shareholder advocacy is another way that SRI concerns or issues can influence the direction of companies “from within”, usually via exercising voting rights (see Active Share Ownership below).
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 initiated a set of Principles for Responsible Investing (UNPRI). The AvSuper Trustee supports the development of such investment frameworks for considering environmental, social and governance (ESG) issues as part of investing. While the Trustee does not currently consider it appropriate to sign up to UNPRI, it continues to work towards maintaining and introducing effective ESG practices into its general operations, and encourages our fund managers to consider UNPRI’s principles.
AvSuper does not currently offer investment options which are purpose built for ESG, SRI or governance issues. However, some of our investment managers, particularly those investing in share markets and real assets (property and infrastructure), use SRI 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.
We actively engage with our investment managers on the various SRI 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 managers that are capable of quickly adapting to change which takes all these issues into consideration.
Implementing responsible investing
AvSuper’s appointed investment managers may undertake 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 environmental, social and ethical responsibility.
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 made having regard to the best interests of members at all times.
Email: firstname.lastname@example.org | Local call: 1300 128 751 | Phone: 02 6109 6888 | www.avsuper.com.au
This information is of a general nature only and does not take into account your personal objectives, situation or needs. Before making a decision about AvSuper, you should consider your own requirements and the relevant Product Disclosure Statement (PDS). For a copy call us or visit the AvSuper website, www.avsuper.com.au. AvSuper Pty Ltd (ABN 46 050 431 797, AFSL 239078) is the Trustee of the AvSuper Fund (ABN 84 421 446 069). FS5010.6 12.2017