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.

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.

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.

 

You can read our Responsible Investment Policy (PDF) here.

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. 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.

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 as such we:

  • Have a Climate Change Position Statement, to help guide the integration of climate change considerations within the broader investment framework
  • Have a Climate Change Road Map which will direct our activities with respect to climate change. We disclosed metrics and targets for the Road Map under the Task Force of Climate-related Disclosure (TCFD) in our Corporate Responsibility Report (PDF). We will report against these measures over time.
  • 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.

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 has global voting guidelines based on Australian Council of Superannuation Investors (ACSI) International Voting Guidelines which have been adapted to reflect key focus areas in relation to tenure and capacity of directors, and diversity on boards. Our global voting guidelines allow consistent voting across holdings. 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:

 

  • Resolutions focused on topics in on our Responsible Investment Principles (PDF)
  • AGMs classified as having contentious resolutions by the proxy voting service provider CGI Glass Lewis or ACSI
  • ACSI recommended AGAINST votes on non-remuneration related resolutions
  • Where a fund manager has voted AGAINST a non-remuneration related resolution
  • Shareholder proposals
  • High profile external events.

 

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

 

Australian and international voting records are available 7 days after the company meeting. See also the summary of proxy voting for FY 2017/18 in our Corporate Responsibility Report (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 has a comprehensive engagement program which 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), Workforce Disclosure Initiative (to seek transparency from companies on how they manager workers).
  • Service provider engagements through ACSI.

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

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.

Global Real Estate Sustainability Benchmark (GRESB)

Cbus is an investor member of GRESB an organisation that assesses the sustainability performance of real asset sector portfolios and assets.

 

 

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 and is also on the management committee 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.

 

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 Portfolios supporter

In September 2013, the Cbus Board made the decision not to 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 Cbus Corporate Responsibility Report (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 2018

For the FY17 year, which is reported in FY18, Cbus achieved results above the median across all areas of ESG, scoring at least A in all areas except for fixed income.

 

We are aiming for A+ across all categories by 2020.