Investing in a responsible way means that the impacts, both positive and negative, on the natural environment as well as on people and society, are taken into consideration when making investment decisions.
At Club Plus Super, we believe in responsible investment because it helps build a better future for our members and the generations to come. We believe that companies that manage environmental, social and governance (ESG) issues properly will be more financially sustainable and perform better over the long term. This ensures the investments we make, not only deliver strong long-term returns for members, but help protect or improve the welfare of the community and the environment.
Responsible investing also includes active ownership practices such as voting on company resolutions and engaging with companies to influence behaviors, as well as providing disclosure about investments of the fund including the external investment managers used.
We have outlined our approach to responsible investing in our Responsible Investment Policy. Please contact us to request a copy.
We believe that ESG factors can have a material impact on long-term investment outcomes for our members. It is therefore important that the consideration of ESG factors is integrated into the investment decision making processes across the Fund.
To do this, we leverage the specialist skills and resources of our asset consultant and more than 25 experienced global investment managers. This ensures the investments we make, not only deliver strong long-term returns for members, but help protect or improve the welfare of the community and the environment.
Therefore, with the help of our asset consultant we are very careful about the investment managers we choose. We make sure that these investment managers have a sound approach to responsible investment and ESG integration. You’ll find a list of the investment managers we currently use here.
When looking at a potential investment, our investment managers assess not just the opportunities of a particular investment, but also the risks. The factors they may consider include climate change, resource scarcity, renewable energy and pollution, as well as workplace practices such as modern slavery, social inclusion, and safety.
Climate Change Position Statement (extract from Responsible Investment Policy)
'Climate change’ refers to increases in global average air and ocean temperatures. The impacts include melting of snow and ice, rising global sea levels, changes to atmospheric and ocean circulation and potential changes in weather patterns causing a higher occurrence of fires, floods and storms. Most scientists agree that these changes have been attributed to human-produced carbon emissions.
Club Plus Super acknowledges that climate change is a complex environmental and social issue and the risks and opportunities have potentially significant impacts for the global economy and investment markets over time. The consequences may present substantial disruption to current and future generations and may affect the performance of investment portfolios to varying degrees across companies, sectors, geographical regions and asset classes. Because climate change has the potential to impact investment risk and returns, it is important that it is considered alongside traditional financial and business risk factors in making investment decisions.
Driven by associated regulatory responses around the world and growing social expectations, the actions around climate change and the resulting momentum to transition to a low carbon future, give rise to a number of risks and opportunities for institutional investors such as Club Plus Super.
Climate change risks include:
- The potential for physical damage to assets due to the effects of climate change (e.g. due to rising sea levels, and/or extreme weather events such as fires or floods).
- The risk of regulatory responses and/or government policy to reduce emissions disrupting the investment case for certain assets (e.g. carbon taxes or tighter emission regulations).
- The demand for certain assets potentially reducing leading to stranded assets as new technologies are developed or the social licence for certain industries is eroded (e.g. coal).
- Reputation risk to investors not recognising climate change and taking appropriate actions.
Climate change opportunities include:
- The emergence of new industries aimed at the mitigation of climate change impacts (e.g. low emission transportation).
- Opportunities to invest in renewable energy and other assets that will be resilient to the impacts of climate change (e.g. solar and wind power generation).
- Assets that could be assisted by government subsidies to encourage investment in carbon reduction or mitigation.
Club Plus Super is acting to address these risks and opportunities by working with its asset consultant and external investment managers and over time aims to:
- Incorporate climate change into the consideration of its investments.
- Encourage its investment managers to identify and assess ESG risks and opportunities in their investment analysis, including climate change.
- Request disclosure of policies and demonstration of its investment managers’ approaches to incorporate climate change considerations.
- Estimate the potential impact of climate change on investment options using scenario analysis.
- Increase the Trustee’s knowledge and awareness of climate change as it applies to investment decision making through participation in relevant industry forums.
- Continue to invest with investment managers that identify and invest in assets that prove to be resilient to the impacts of climate change and/or will benefit from the transition to a low carbon world (such as wind power generation and water related assets, sustainable buildings).
- Monitor the carbon intensity/footprint of the Australian Shares Asset Class and International Shares Asset Class.
- Monitor this important issue through its asset consultant and will evolve policies and processes in response to emerging risks, research and market practice.
We can’t possibly be across all the ESG risks and opportunities that can arise in all the assets we invest in. Instead we leverage the significant specialist responsible investing skills and resources of our investment partners. These partners, including our asset consultant and the global investment managers we use, are on top of the relevant ESG issues, engage with current or potential investee companies on our behalf to bring about change in company behaviours and are involved in a range of global industry groups or initiatives to support efforts by investors to improve the welfare of the community and the environment.
We are also a member of the Australian Council of Superannuation Investors (ACSI) which is a not for profit organisation formed in 2001 to provide environmental, social and governance (ESG) research, advice and services to members. ACSI provides members with opportunities to collaborate on ESG issues and creates an ESG ‘community of interest’ to enable members to share ideas and learn from each other. As a member, Club Plus Super are able to access specialist ESG research and leverage the extensive engagement work carried out by ACSI. More information on ACSI can be found on their website.
Listed below are some of the organisations and/or initiatives related to responsible investment and associated issues, that collectively our investment managers support or are involved with.
Climate Bonds Initiative
ESG Research Australia (ESGRA)
Global Investor Statement on Climate Change
Green Bond Principles (GBP) run by International Capital Markets Association (ICMA)
Green Building Council of Australia
GRESB (formally known as Global Real Estate Sustainability Network)
Harvard Law School Institutional Investor Forum
Institutional Investors Group on Climate Change (IIGCC)
Investor Network on Climate Risk (INCR) / Ceres
PRI Investor Statement in support of Modern Slavery Act
Pride in Diversity
Principles for Responsible Investment (PRI)
Responsible Investment Association Australasia (RIAA)
RIAA Human Rights Working Group
Solar Energy Industries Association
Sustainable Finance Policy Working Group - Association for Financial Markets in Europe
United Nations Environment Program Finance Initiative (UNEP FI)
World Economic Forum’s Future of Energy Council
We currently invest in a range of assets that have a strong link to providing a positive impact on the natural environment and the world we live in. These include renewable energy assets such as wind farms, world leading energy efficient commercial buildings, and water filtration plants. Listed below are some of the assets that we are invested in via pooled vehicles of our investment managers.
- Wind farms that are generating enough clean energy to power millions of average Australian homes and save a significant amount of greenhouse gases each year.
- Mumbida Wind Farm
- Bald Hills Wind Farm
- Wattle Point Wind Farm
- Hallett Wind Farms
- Alice Springs airport which has a large onsite solar installation that generates up to 100% of its daily energy needs, significantly reducing carbon emissions and delivering cost savings to increase the long-term value of the airport.
- Lend Lease APPF Commercial Fund, a portfolio of 21 Australian office towers, which has been ranked the world’s best from over 800 global participants by the Global Real Estate Sustainability Benchmark (GRESB), a global real estate benchmark for environmental, social and governance performance. In addition, a number of buildings in this fund have been awarded the highest star energy rating by the National Australian Built Environment Rating System (NABERS), a national rating system that measures the environmental performance of buildings in terms of energy efficiency and greenhouse gas emissions.
- Wyuna Water which operates filtration plants that provides clean water to more than 500,000 people in Sydney. This operation is powered completely by a hydro-electric facility that enables it to be entirely self-sufficient, exporting renewable energy back to the grid.
- Green/sustainable bonds issued by corporates or government and semi-government agencies that are funding projects and assets that deliverable positive environmental and/or social outcomes such as affordable housing, pollution prevention and control, alternative energy facilities and water management.
Club Plus Super holds voting rights in relation to shares of Australian listed companies that we invest in. Voting rights are an important aspect of share ownership and exercising them is a means by which we can express our views regarding a company’s strategy, leadership, remuneration, mergers and acquisitions and its ESG practices and disclosure.
Our approach to proxy voting (extract from Investment Policy Statment)
The Trustee recognises that voting rights are an important aspect of share ownership and should be managed effectively. Voting rights should be exercised and proxy votes should be cast in a manner that seeks to improve the long-term investment performance of the Fund in the best interests of members.
For the Trustee’s investments in Australian share mandates, the Trustee requires the investment managers to have a written Board approved policy on the exercising of proxy votes and formal internal procedures to ensure the policy is applied consistently. The Trustee has delegated the authority and responsibility for exercising the Trustee’s proxy votes to these investment managers and directs them to actively participate in all corporate actions and voting rights and requires its voting to be in the best interests of members of the Fund.
While the investment managers will retain autonomy for exercising proxy votes, the Trustee retains the ability to direct investment managers in relation to the exercise of proxy voting and corporate actions but will only do so where it is deemed to be in the best interests of the Fund. The exercise of proxy votes by investment managers is monitored by the Trustee on an annual basis.
It is recognised that the Trustee’s investment in international shares is via pooled unit trusts where the investment manager owns the voting rights and, accordingly, the Trustee does not have the opportunity to influence voting decisions.
In accordance with the SIS Act (2.38), the Trustee discloses its policy with regards proxy voting on the Fund’s website, as well as a summary of how the entity has exercised its voting rights in relation to shares in listed companies during the previous financial year.