Our goal is to grow and protect your retirement savings sustainably over the long-term.
Environmental, social and governance (ESG) risks
We manage risk to generate sustainable, long-term returns for our members.
Why are environmental, social and governance (ESG) risks important?
ESG risks and opportunities can impact investment outcomes. A company’s likelihood of long-term and sustainable success will depend on how it’s managed, how it operates, and how it impacts the environment and society.
Monitoring and managing ESG risks allow us to influence how companies are managed and operate. This means we can make better risk-based decisions to protect and grow our investments — and by extension, your retirement savings. It can also lead to better outcomes for the environment and your community.
Our approach to managing ESG risks
ESG risks can be broad, but the key ESG risks we consider when investing include climate change, diversity, governance and remuneration.
We consider ESG risks, impacts and opportunities throughout the entire life of our investment process. This includes how we select, retain, manage and realise investments.
To help manage our ESG risk we:
- engage with companies we invest in to improve their operations - see Active ownership
- vote at shareholder meetings to influence company governance - see Share voting
- collaborate with industry groups on responsible investment practices - see Industry collaboration
To find out more, read our ESG Policy
Our ESG investment principles
We follow five investment principles to integrate ESG risks and opportunities into our investment process:
- Investment: Ensure ESG risks are captured in the investment valuation thesis and priced accordingly.
- Stewardship: Protect and enhance the value of assets under our stewardship by promoting and influencing positive long-term behaviours through active engagement with investee governance structures.
- Values and collaboration: Support and promote the values of the UN Principles for Responsible Investment (UNPRI) and of Spirit Super.
- Reporting and disclosure: Provide substantive and appropriate reporting and disclosures to members and industry bodies about our ESG risks.
- A long-term focus: Consider investment and non-financial risks and processes through a long-term lens to mitigate the problems of short-termism.
We‘re active owners when it comes to managing investments we hold on behalf of members.
As an active owner, it’s our job to manage investments appropriately and to use our shareholder rights in the best interests of our members.
Strategies to influence change
We actively engage with the companies we invest in to promote positive ESG outcomes. We do this:
- via our investment managers — who engage with companies on our behalf
- as a member of the Australian Council of Superannuation Investors (ACSI) and the United Nations Principles for Responsible Investing (UNPRI) — who advocate and engage with company management on behalf of investors
Sometimes we may invest in companies with a poorer ESG profile if we feel we can engage with and positively influence the company to improve its ESG performance. Apart from having a positive impact on the investment’s overall ESG performance, this allows us to benefit from any increase in value the investment might experience because of these improvements.
Class actions allow shareholders to collectively claim for losses against a company that resulted from a breach in corporate regulations and poor governance practices.
We engage in class actions:
- as a last resort governance mechanism
- as a cost-effective way to recover member losses caused by a company’s poor conduct
- to improve governance standards in the market
Investments within our listed assets portfolio are managed by external asset managers.
The majority of our external asset managers are signatories to the United Nations’ Principles for Responsible Investment (UNPRI) and must consider ESG risks when making investment decisions.
Spirit Super is also a signatory to the UNPRI in its own right.
When engaging new asset managers, we assess their ability to integrate ESG risks into their investment process. Once appointed, we monitor their activities to ensure they’re managing ESG risks appropriately and continuously across our portfolio.
Australian Asset Owner Stewardship Code
We are a signatory to the Australian Asset Owners Stewardship Code. We support the principles outlined in the code and the guidance provided on improving the quality and transparency of company engagement and voting practices of Australian asset owners.
For more information about how we adhere to the code, read the Spirit Super Stewardship Statement.
As a large super fund, we hold a significant number of shares on behalf of members.
It’s our responsibility to manage each investment appropriately and to discharge shareholder rights in the best interests of our members.
Where possible, we use our share voting rights to influence how the companies in which we invest manage ESG risks and outcomes.
We use the recommendations of the Australian Council of Superannuation Investors (ACSI) as a guide when voting at shareholder meetings.
By voting in line with ACSI recommendations, our votes are pooled with other like-minded investors. This gives our votes greater impact and allows us to have more influence over how companies we invest in operate, behave and report their ESG activities.
Our share voting policy
It’s our policy to vote on all shareholder resolutions that we are entitled to vote on. This can include:
- the appointment of board members
- director remuneration
- changes to corporate policy
- changes to company operations
We vote directly on shareholder resolutions for all listed Australian shares and for all unlisted directly held assets.
For listed international shareholdings held via pooled trusts, the investment manager(s) of the pooled trusts will vote on our behalf.
Australian listed shares
Usually, we vote in line with the Australian Council of Superannuation Investors (ACSI) voting recommendations for all Australian listed shareholder resolutions. However, we retain discretion over proxy voting decisions and may vote differently in some circumstances.
For resolutions with investment considerations (rather than governance), and where ACSI is unable to provide a voting recommendation, we will liaise with our listed equity managers before voting.
You can find a record of how we exercise our share voting rights below. We’ll update these records every six months.
Australian Listed Equity Proxy Voting Reports
We work with like-minded investors to influence change on key ESG issues.
By collaborating with industry groups, we can have a greater influence on investment markets, regulatory frameworks, company activities and their long-term performance.
Here are some of the industry groups we collaborate with:
Australian Council of Superannuation Investors (ACSI)
ACSI exists to provide a strong, collective voice on ESG investment issues on behalf of its members.
Through the ACSI, we collaborate with other investors to achieve genuine, measurable and permanent improvements in the ESG practices and performance of the companies we invest in. We also take guidance from ACSI’s various investment policies, guidelines, and frameworks, and support its company engagement program.
United Nations Principles for Responsible Investing (UNPRI)
We are a signatory to the UNPRI’s six aspirational principles designed to encourage and assist investors to integrate ESG factors into their investment processes.
Under the six UNPRI principles, we'll:
- incorporate ESG issues into investment analysis and decision-making processes
- be active owners and incorporate ESG issues into our ownership policies and practices
- seek appropriate disclosure on ESG issues by the entities in which we invest
- promote acceptance and implementation of the principles within the investment industry
- work together to enhance our effectiveness in implementing the principles
- each report on our activities and progress towards implementing the principles.
Association of Superannuation Funds of Australia (ASFA)
ASFA is the peak policy, research, and advocacy body for Australia’s super industry. ASFA works alongside government bodies and super funds to achieve good public policy and industry-best practice.
Australian Institute of Superannuation Trustees (AIST)
AIST is the principal advocate and peak representative body for the not-for-profit super sector. AIST plays a key role in policy development and is a leading provider of research.
Our advisers and investment managers consider climate change when making investment decisions.
Risks and opportunities in climate change
Our managers investigate the effects of climate change when analysing new investments.
Below are the specific climate change-related risks we incorporate into our investment strategy.
- The physical impact of climate change on investments from weather change, including acute weather events and changing weather patterns.
- Changes to the regulatory environment because of climate change, including the pricing of carbon to limit the effects of climate change.
- Substitutional and technological change because of regulatory and physical changes to weather and the climate.
To find out more, read our ESG Policy
Our commitment to limiting climate change risk
We work with expert climate-related organisations to help evaluate the risks and challenges of climate change when we create and refine our investment strategy.
Below are a few of the climate change initiatives we’re involved in.
Australian Council of Superannuation Investors (ACSI)
Through our membership of ACSI, we can engage with companies to ensure they’re sufficiently addressing climate risk. By working collectively with like-minded investors, we can influence how companies are managing climate change issues.
ACSI also works with and on behalf of its members to develop long-term public policy certainty around climate change. This includes collaborating with groups like the Investor Group on Climate Change (IGCC), which focuses on improving government policies and investment practises for the benefit of super fund members.
Task Force on Climate-related Financial Disclosures
We’re committed to the Task Force on Climate-related Financial Disclosures (TCFD) aligned disclosure framework. The taskforce develops voluntary, consistent climate-related financial risk disclosures that companies can use when providing climate-related information to members, investors, lenders, insurers and other stakeholders.
This framework helps us mitigate climate risks across our portfolio.
Climate Action 100+ initiative
We’re a signatory to the Climate Action 100+ initiative (CA100+). CA100+ is an investor initiative that seeks to ensure that the world’s largest corporate greenhouse gas emitters take necessary action on climate change. The companies include 100 ‘systemically important emitters’, accounting for two-thirds of annual global industrial emissions, alongside more than 60 others with significant opportunity to drive the clean energy transition.