Investing responsibly

We have identified several key areas of focus: climate change and the energy transition and human, community, labour rights (for example modern slavery and workplace safety) as well as investing in the real economy. These areas of focus represent systemic risks, are aligned with our members' interests, and are topics where we believe we can measure, engage and report on our progress.

Climate change and the energy transition

We believe that climate change is one of the most significant challenges we face as a society today, and that tackling climate change needs to be done collaboratively with a focus on real world impact. Our aim ultimately is to support the energy transition, and in doing so, help ensure the transition is as orderly as possible so that our members' benefits are protected. 

We have developed a Climate Change Position Statement (PDF), which helps guide the integration of climate change considerations within our broader investment framework. We have a range of climate change goals which include:

• Net zero emissions by 2050
• Contribute to a 45% reduction in real world emissions by 2030
• 1% of our total funds under management (FUM) is available to be allocated to climate related investments 
• Engage with our highest Australian listed equity companies who contribute most to our carbon footprint to improve their responses to climate change 

These goals currently cover over 70% of our portfolio and work continues to expand our coverage to include additional asset classes. Find out more detailed information about our climate change goals. We have previously been certified as carbon neutral for FY19, FY20, and FY21 and you can  view our previous carbon neutral certificates. 

Our third Climate Change Roadmap (PDF) sets out our key climate change activities to 2024. In line with this roadmap we are in the process of developing a decarbonisation strategy for our operational emissions with the goal of aligning our actions to real world decarbonisation.

Our progress towards our climate change goals

Each year we disclose how we’re measuring and reporting metrics and targets for the climate change roadmap under the Task Force for Climate-related Financial Disclosures in our Responsible Investment Supplement (PDF).

Human, community and labour rights

Modern slavery

We report against the Modern Slavery Act, which aims to increase business awareness of the risks of modern slavery in the production and supply chains of Australian goods and services and work to minimise the risk of modern slavery in our operations and supply chains. This includes engaging with likeminded investors and companies about modern slavery risk management. You can view our most recent Modern Slavery Statement.

Workplace safety

Safety disclosures and practices provide insights into a company’s operational performance and culture. Safety considerations form part of the due diligence process for relevant assets, risk committee reporting, and our engagement with companies, which helps inform how we vote at company General Meetings. Not only is this important to understand when making investment decisions, but it also supports our members and the industries in which they operate.

First Nations

Poor management of cultural heritage issues and relationships by companies can increase the risk of legal costs, project delays, regulatory risk and reputational harm, impacting our members' investments. Cultural heritage risk management and engagement with First Nations People are matters that apply to any company that operates on cultural lands. We chair the Australian Council of Superannuation Investors’ (ACSI) Working Group on Rights and Cultural Heritage Risk Management, which aims to create tools for companies to improve cultural heritage and First Nations People engagement. 

Investing in the real economy

Cbus Property

With a long history in the building and construction industry and through our wholly owned entity Cbus Property, we own one of the most sustainable commercial property portfolios in the country as rated by NABERS.^*

In aligning with our members’ interests, embedding strong ESG practices in the built environment, including the development of sustainable building and construction practices, can generate long-term, sustainable value and positively impact our members’ quality of life in retirement.

In addition, Cbus Property's office portfolio achieved net zero carbon status in 2022, eight years ahead of their 2030 target, as certified by the Climate Active Carbon Neutral Building Standard; and they again received global recognition in the annual Global Real Estate Sustainability Benchmark (GRESB) Real Estate Assessment.

^*Cbus Property has been recognised as an industry leader in the 2023 NABERS Sustainable Portfolios Index, which calculates a NABERS Portfolio rating for Cbus Property’s office portfolio.

Investing in renewables infrastructure

We have invested in several wind and solar energy opportunities, powering hundreds of thousands of households with clean energy. We also invest in renewables and low emissions technology in Australia and abroad.

Social and affordable housing

We provide investment funding to support social and affordable housing including the construction of new dwellings. This funding not only supports new home developments for vulnerable Australians but also supports the economy through job creation. We are actively engaged with a range of stakeholders in the social and affordable space to find more ways to attract institutional investment into the sector noting any investment that we make must be in the best financial interests of our members.

Sustainability Development Goals (SDGs)

Through our commitment to our members and the industries they work in, being an employer of choice, and engaging and advocating across our key responsible investment focus areas (including climate change) means that each year we contribute to a range of SDGs.

The SDGs where we believe can contribute are:

For more information on how we aim to contribute to the SDGs and our progress, see our Responsible Investment Supplement (PDF).

Integration

We seek to integrate responsible investment throughout our investment process to enable a better understanding and management of opportunities and risks and with the expectation of generating strong long-term returns for our members.
 

Integration of material ESG risks and opportunities alongside traditional financial analysis (such as revenues, expenditure, cashflows and cost of capital) enables more informed decision making and seeks to improve risk adjusted returns over time.

We do this by considering how material ESG risks and opportunities, those that are highly likely to affect business or investment performance, are managed when making investment decisions.

We seek to apply this approach to both our internally managed investment portfolios and when choosing and monitoring external investment managers, companies and assets.

Active stewards

Our Stewardship Framework deploys our resources with the aim of supporting real world outcomes¹ that have the potential to protect assets and preserve value for our members. Our stewardship approach involves:

• Advocacy
• Voting
• Engagement with companies
• Considering the stewardship practices of our external investment managers

For further information see our Stewardship Statement (PDF).

¹Real world outcomes refer to changes that affect the systems in which our investee companies operate, and in terms of our ESG approach refer to identifying stewardship priorities that are aimed at promoting a shift towards a sustainable finance system, and supporting development or enhancement of standards, guidelines and regulatory reform.

Evidence driven

We use a wide range of information and data to continuously evolve our evidence-based approach. We are involved in ongoing research to understand emerging issues and provide evidence to measure and support our approach.

Proxy voting

Voting at company meetings is one way we can exercise our shareholder rights. This may include a right to nominate or vote with respect to the nomination of directors we believe best represent our members’ interests.

For ASX 300 and global companies, our voting is guided by the ACSI Corporate Governance Guidelines. These are developed in consultation with ACSI members (including Cbus Super) and a broad group of stakeholders.

There are limited circumstances where we cannot vote, and the Fund has a policy regarding stock lending. Read our Responsible Investment Policy (PDF).
Each year, we identify proposals for internal review. As part of this review, we consider a range of inputs from investment managers, service providers, other stakeholders (where applicable) and our own engagement with the company.

Australian and international voting records are available one day after the company meeting. See also the summary of proxy voting in our Responsible Investment supplement (PDF).

Engagement

We engage with a broad range of stakeholders including our external investment managers, listed companies, and directly held unlisted companies.

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

We undertake three types of engagement:
 

1. Direct - involves meetings with a company on financially material ESG issues.
2. Service providers - through the Australian Council of Superannuation Investors (ACSI) for Australian shareholdings and through the EOS at Federated Hermes for our global shareholdings.
3. Participation - with industry partners and other investors. For example, through the Climate Action 100+ initiative and Investors Against Slavery and Trafficking Asia Pacific (IAST APAC).

View an illustration of our Stewardship process.

Advocacy and participation

We play an active role in advocating in our members' best financial interests with a focus on influencing policy, reporting standards, and regulatory guidelines. We work alongside others where we can share knowledge and learnings, manage resources and be more effective in our actions.

We undertake 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. Such activities include:

• Securing shareholder rights.
• Guidelines that communicate best practice (e.g. ACSI Corporate Governance Guidelines).
• Standardisation frameworks (e.g. International Sustainability Standards Board [ISSB] global sustainability reporting standards, Australian Sustainable Finance Institute [ASFI] Sustainability Finance Taxonomy).
• Regulation applying to all relevant companies and director decisions (e.g. mandatory reporting obligations).

For further information see our Stewardship Statement (PDF) or refer to the submission section, as well as our Responsible Investment Supplement (PDF).

We participate through the following organisations and initiatives:

Exclusions when investing directly in shares

Whilst our primary approach to responsible investment is through ESG integration, there are occasions where we consider investment in particular companies and industries to be incompatible with the long-term requirements of our members.

We exclude investments across both public and private markets in companies directly involved in certain controversial weapon manufacturing (specifically cluster munitions, biological and chemical weapons, anti-personnel mines, depleted uranium, incendiary and white phosphorus weapons where involvement relates to core weapons components), and companies that earn more than 5% of revenues from tobacco product manufacturing. 

For public markets, our compliance system incorporates data from globally recognised third-party data sources to make this determination^*, while our private market managers are contractually required to make this determination prior to investment.

We may also employ investment mandate limitations to some index-based emerging market mandates where we have limited ability to engage and influence companies with very poor ESG practices. Our current approach for these mandates excludes companies that have attracted the Sustainalytics^® highest controversy rating of “Severe” for a period of at least 12 months, with this list being reviewed annually.

^*We currently use the Morningstar Inc. Sustainalytics^® platform data for this purpose. 

Tobacco free finance signatory.

Cbus Super is a signatory of the Tobacco-Free Finance Pledge.

Transparency

An 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 2023 (PDF) and the  Responsible Investment Supplement 2023 (PDF) which has been independently reviewed and verified through an external limited assurance process.

Measurement

Cbus Super is a PRI Signatory and for 2023, Cbus Super’s transparency and assessment results showed we were above the median for all nine PRI modules against our global asset owner peers with Funds Under Management (FUM) of between A$50b to A$250b. For more details, see our 2023 PRI Transparency report (PDF), and our 2023 PRI Assessment report (PDF).