At Super SA, we understand our members are increasingly interested in how their superannuation is invested and are concerned with how those investments impact our broader community.
The Super SA Board is responsible for the administration of South Australian public sector superannuation funds, and responsibility for the investment and management of those funds sits with our specialist investment manager, Funds SA.
An integral part of Funds SA’s process is incorporating responsible investing to support long-term outcomes. Funds SA defines responsible investment as a financial outcomes focused approach that complements traditional investment analysis through emphasising Environment, Social, Governance (ESG) factors and Investment Stewardship. In practice, this means that responsible investing is important for all Super SA’s investment options.
Environmental, Social, Governance
ESG Integration is the inclusion of ESG factors to determine inherent risks when investing. Funds SA considers ESG issues and opportunities in investment analysis, decision making, and when monitoring the activities of their external managers.
Considering how companies impact the environment. For example, recognising that climate change presents a systemic risk impacting potential investment returns over the coming decades.
- Climate change
- Resource use and resource scarcity
- Biodiversity and nature impacts
- Environmental regulations
- Physical risks to business operations
Examining how a company is looking after the interests of employees, customers, and the broader community to protect investment value.
- Human rights
- Human capital and labour practices
- Employee safety, health and wellness programs
- Understanding of supply chain
Analysing the governance procedures and policies to ensure that the interests of shareholders are aligned with management.
- Corporate behaviour
- Governance structure
- Bribery and corruption
- Code of conduct / values
Funds SA recognises that climate change presents a systemic risk impacting potential investment returns over the coming decades. Across the globe, economies are decarbonising, and this brings significant risk and opportunity for investors. In 2021, Funds SA published its Climate Change Position Statement that outlines its approach to addressing climate change risks in line with the objectives of the Superannuation Funds Management Corporation of South Australia Act 1995.
The Funds SA approach to climate change risk will evolve as science, policy, and investment markets develop a greater understanding of climate resilient investment portfolios. Funds SA has developed a Climate Risk Response Plan, in which it outlines the initial actions it will take to meet its goal of managing the long-term financial risks, the opportunities of climate change, and the transition of its investment portfolio towards Net Zero Emissions by 2050.
To achieve its commitment to Net Zero by 2050, Funds SA will take action across its 5-Pillar Climate Risk Response Plan Framework to support a 45% reduction in global emissions by 2030, consistent with the goals of the Paris Agreement.
Investment Stewardship is the responsible oversight and management of investments to encourage long-term value creation. Funds SA does this through various means including proxy voting, engagements, and class actions.
- Proxy voting is exercising voting rights at company meetings to formally express approval (or disapproval) on relevant matters such as remuneration, director elections, and corporate activity.
- Engagement is interactions between Funds SA, its Investment Managers, and companies, in order to improve practice on an ESG issue.
- Class actions is where Funds SA participates in proceedings against a company to recover losses incurred if a company has breached governing regulations.
Funds SA is a signatory to the United Nations-supported Principles for Responsible Investment (PRI)
The PRI is an international global network of asset owners, managers, and service providers working towards putting responsible investment into practice. The principles provide a framework for integrating ESG considerations into investment decision-making and ownership practices.
The PRI is complementary to Funds SA’s Responsible Investment approach and brings it in alignment with many of its investment managers who are also PRI signatories. PRI membership supports Funds SA in maintaining awareness of global responsible investment practices and building its capability, networking, and access to industry tools/guidance.
Socially Responsible Option
Super SA offers a Socially Responsible (SR) option that incorporates environmental, social and governance (ESG) factors and ethical principles into the investment decisions.
Super SA’s SR option invests in line with socially responsible investment criteria established by Funds SA. This includes a ‘best-in-class’ approach to target the best companies in each economic sector according to MSCI ESG ratings, and a focus on renewable energy and social infrastructure. Furthermore, there are restrictions on investments in areas of high negative social impact.
Funds SA implements this strategy by engaging with investment managers to provide investors with exposure to a diversified portfolio with an emphasis on growth assets (such as shares and property).