Sustainability

Responsible investment is a key pillar of Cbus' investment strategy. We
believe this is integral to delivering sustainable long-term value creation for
our members.

What we believe in

Cbus believes that as a responsible investor we can improve long term risk adjusted returns through active involvement in Environmental, Social and Governance (ESG) issues. Companies that take account of ESG factors are likely to have sustainable business models and an ability to generate long term shareholder returns for our beneficiaries.

We also believe we have a role in:

  • influencing and contributing to the shift towards a sustainable finance system — (the Sustainable Development Goals - SDGs)
  • demonstrating leadership in the built environment
  • operating in a manner consistent with our responsible investment approach and
  • being transparent in our approach to achieving our objectives

Our team at Cbus also overwhelmingly recognised the importance of investing responsibly in terms of ESG issues, with 84% of staff noting the importance of this approach in a staff survey in May 2018.

What is important to us

To provide guidance for our external investment managers and growing internal team, we have developed the Cbus Responsible Investment Principles (PDF). The principles communicate the issues that are important to Cbus, that we believe contribute to sustainable value creation. The Principles will also be reflected in our voting and engagement activities.

Responsible investment framework infographic

 

 “Responsible investment is fundamental to the delivery of strong risk adjusted returns. We consider ESG risks and opportunities in our investment decision making across our portfolio, with the same principles applied whether an investment is held directly or managed externally."

Kristian Fok, CIO

 

Strategic direction

Compass icon to signify the direction that Cbus is taking to achieve sustainability

The Responsible Investment Policy

The Cbus Responsible Investment Policy outlines the Fund’s approach to responsible investment. For Cbus, this means taking account of ESG risks and opportunities in the investment decision making process, exercising positive influence through Fund investments and the operations of the Fund itself.

 

Read our Responsible Investment Policy (PDF).

 

Our responsible investment decision making is guided by the Cbus Board Governance Framework.

Our Responsible Investment principles

Climate change Cognitive diversity Health and safety Labour and human rights in direct operations and supply chains Product supply chains

 

Our Sustainable Development Goals

Cbus has also made a commitment to meaningfully contribute to the Sustainable Development Goals (SDGs). The SDGs where Cbus believes it can invest, engage and advocate to make a difference are:

5. Achieve gender equality and empower all women and girls.

7. Ensure access to affordable, reliable, sustainable and modern energy for all.

8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.

9. Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation.

11. Make cities and human settlements inclusive, safe, resilient and sustainable.

13. Take urgent action to combat climate change and its impacts.

17. Strengthen the means of implementation and revitalise the global partnership for sustainable development.

Climate change

We have done a lot of work on addressing risks and opportunities associated with climate change. Cbus recognises climate change as an important issue and our approach is continuing to evolve. In response we:

 

  • Have a Climate Change Position Statement (PDF), to help guide the integration of climate change considerations within the broader investment framework.
  • Have released our 2020 Climate Change Roadmap (PDF) which contains our broader targets for Net Zero Carbon Emissions by 2050, with an interim absolute emissions reduction target of 45% by 2030 across our entire portfolio. We disclose how we’re measuring and reporting metrics and targets for the Roadmap under the TCFD in our Responsible Investment supplement (PDF) to the Cbus Annual Integrated Report (PDF).
  • Encourage our active external fund managers and the listed companies in which we invest to incorporate and consider climate change risk and opportunities in their investment processes.
  • Contribute to the public policy discussions through our membership with climate change organisations. See 'Advocacy and Collaboration' for further information.
  • In 2015, Cbus participated in the Mercer Climate Change Project. The output provided expected returns for various asset classes under different climate change scenario. You can read the Mercer Climate Change Report (PDF) here.
  • Received Federal Government certification of our Trustee office being carbon neutral for the 2018-19 financial year. Read our Public Disclosure Summary for the Australian Government Carbon Neutral Program (PDF)  that meets the requirements of the National Carbon Offset Standard.

The 'how'

Analytics board icon to signify how Cbus works to achieve sustainability

ESG Integration

ESG integration is the analysis of material ESG factors in investment analysis and investment decisions.

 

The approach to implementation is shaped by the Fund’s investment strategy including outsourcing to investment managers to invest on its behalf and direct investment through internally managed investment portfolios. We apply the same approach, irrespective of whether an investment is held directly or by an external manager.

Our drive to enhance responsible investment practices supports the delivery of long-term returns to our members.

Nicole Bradford, Portfolio Head Responsible Investment

Influence through active ownership

Stewardship Statement

We have a long history of voting and engaging with companies. In May 2018, the Australian Council of Superannuation Investors (ACSI) launched a Stewardship Code. The aim of the Code is to raise the transparency and accountability of voting, engagement, advocacy and oversight of managers' stewardship practices. Cbus is a signatory to the Code and has a Stewardship Statement (PDF).

Proxy voting

Voting at company meetings is one way where the Fund can exercise its shareholder rights to influence and encourage better ESG practices among in the companies we invest in.

 

The Fund's voting practices domestically and internationally are based on the Australian Council of Superannuation Investors (ACSI) Corporate Governance Guidelines to ensure consistency of our voting process. An overview of our Key Voting Positions (PDF) can be found here.

 

There are limited circumstances where the Fund cannot vote, and the Fund has a policy regarding stock lending. For further information see our Responsible Investment Policy (PDF).

 

Cbus’ voting positions are not considered in isolation, Cbus will consider engagement with companies, our managers and broader stakeholder views (where applicable). In all cases the Fund will make its voting decision based on the best long-term interests of members.

 

When a contentious issue arises, the Fund will seek a range of inputs and will consider engagement progress and outcomes. Examples of contentious issues include:

 

  • Shareholder proposals
  • High profile external events
  • AGMs classified as having contentious resolutions by the proxy voting service provider CGI Glass Lewis or ACSI

 

The Fund will contact companies pre or post vote when in members best interests.

 

Australian and international voting records are available after the company meeting. See also the summary of proxy voting for FY 2018/19 in our Responsible Investment supplement (PDF).

ENGAGEMENT

The Fund engages with a broad range of stakeholders including its investment managers and listed and unlisted companies in which it invests to promote sustainable value creation in the companies in which we invest.

 

The Fund's engagement program uses multiple mechanisms to protect and enhance the value of its member’s equity holdings.  Engagement can be undertaken directly (both on a strategic and ad hoc basis), in collaboration with other investors, or through external service providers.

 

There are three methods of engagement:

 

  • Direct engagement with companies that represent our largest Australian share holdings and ad hoc issues on issues such as those outlined in our Responsible Investment Principles (PDF).
  • Collaborative engagements, for example through the Climate Action 100+ (to secure climate change commitments from Boards of large companies). 
  • Service provider engagements, through ACSI for ASX300 share holdings and through Hermes EOS for our global share holdings.

If ongoing engagement has been unsuccessful, or a company has been unresponsive, we have an escalation process in place.

ADVOCACY AND COLLABORATION

The fund undertakes advocacy activities such as submissions to government and regulatory bodies with the aim of influencing the broader market and promoting a shift towards a sustainable financial system.

 

For further information regarding submissions we have made directly, refer to the submission section here.

 

Through collaboration, Cbus can exert a greater influence and manage resources more effectively. We collaborate through the following organisations and initiatives:

 

Principles of Responsible Investment (PRI) 

Cbus is a signatory to the PRI.

  • The Principles provide a framework for actions the investment community can undertake to incorporate Environmental, Social and Governance (ESG) issues into their investment decision making. This supports our belief that responsible investment can improve long term returns for beneficiaries and align investors with the broader interests of society.
  • Cbus is required to report annually on our responsible Investment activities to the PRI
  • Cbus has joined the Net Zero Asset Owners Alliance (AOA) a global initiative convened by the PRI and UNEP Finance Initiative. 
  • The AOA is a collaboration among global asset owners committed to transitioning their portfolios to net zero emissions by 2050.

Asian Corporate Governance Network (ACGA)

Cbus is a member of ACGA an organisation dedicated to the implementation of effective corporate governance practices throughout Asia.

 

Australian Council of Super Investors (ACSI)

Cbus is a founding member of ACSI and is a representative on its member council and board. ACSI provides a collective voice on ESG issues through its program of research, engagement, advocacy.

Australian Sustainable Finance Initiative (ASFI)

Cbus’ CEO is a member of the Australian Sustainable Finance Initiative (ASFI) Steering Committee.  ASFI brings together leaders spanning Australia’s major banks, superannuation funds, insurance companies, financial sector peak bodies and academia to develop a Sustainable Finance Roadmap to help shape an Australian economy that prioritises human well-being, social equity and environmental protection, while supporting a stable and financial system. Cbus is also a representative on ASFI working groups. 

The ESG Benchmark for Real Assets 

Cbus is an investor member of GRESB real estate and infrastructure. GRESB is an organisation that assesses the sustainability performance of real assets. 

 

Federated Hermes EOS

Cbus is a client of Federated Hermes EOS, an organisation that undertakes engagement, voting and advocacy in relation to the global companies. The aim of Federated Hermes EOS is to seek positive change for its clients, the companies and the societies in which they operate.

 

 

International Corporate Governance Network (ICGN)

Cbus is a member of the ICGN and is represented on the Board Governance Committee. ICGN promotes effective standards of corporate governance and investor stewardship.

 

Investor Group on Climate Change (IGCC)

Cbus is a member of the IGCC which aims to ensure that the risks and opportunities associated with climate change are incorporated into investment decisions for the benefit of members.

 

Cbus Director and Investment Committee Chairman Stephen Dunne is chair of the IGCC.

 

Responsible Investment Association Australasia (RIAA)

Cbus is a member of RIAA which represents responsible, ethical and impact investors across Australia and New Zealand.

Investment exclusions

Cbus does not invest in shares of companies that are viewed as unsuitable for the Fund to invest in on behalf of members and their long-term investment returns.

 

These include companies involved in the manufacturing of controversial weapons, tobacco products and companies identified in emerging market mandates as having particularly poor ESG practices.

 

We have negative screening for 100% of Australian shares in relation to tobacco and controversial weapons. 100%* of our international shares portfolio is tobacco and controversial weapons free.

 

*95% of our international shares portfolio has a negative screen. Tobacco and controversial weapons stocks are not held in the remaining 5% due to the investment approach of these pooled trust managers.

Tobacco Free Finance signatory

Cbus is a signatory of the Tobacco-Free Finance Pledge.  In September 2013 the Cbus Board made the decision to not invest in companies that manufacture tobacco products.

Being accountable

Tickbox list and loupe icon to signify that Cbus is being accountable

Transparency

One important part of being accountable is providing transparency about our activities and actions. You can read more about our responsible investment activities and outcomes in the Cbus Annual Integrated Report (PDF) and the Responsible Investment supplement (PDF).

Measurement

The Fund will participate annually in the PRI Reporting Framework and publicly disclose the Fund's PRI Assessment Report. The PRI Assessment Report results will be used as one of the key performance indicators to measure the outcomes of the Funds responsible investment activities.

PRI reports 2019

For 2019, which is reported in 2020, Cbus achieved results above the median and scored an A to A+ rating for all asset classes, our best results so far.  Our full Assessment report and Transparency report can be accessed from the links below.