What does Local Government Super's approach to responsible investing involve?
Why have we developed a sustainable and responsible investment policy?
Linking superannuation and sustainability
Glossary of Responsible Investment Terms
How does LGS implement its sustainability policies?
Sustainability governance and management
Sustainability across asset classes
Industry group involvement and external research
Climate change: managing the risks and opportunities
LGS Sustainability Performance Reporting and Policy Downloads
LGS Sustainability Performance Reporting and Policy Downloads
Participation in Climate Change Surveys for Asset Owners
LGS participates in two surveys that gauge the performance of asset owners such as superannuation funds on their management of climate change risks and opportunities in their investments. This enables us to understand and benchmark ourselves on best practice in this area as well as improving disclosure and transparency and communication with our members. The surveys are
1) Asset Owner Disclosure Project is an independent not-for-profit global organisation whose objective is to improve disclosure and best practice standards amongst the global asset owner community from the risks arising from climate change.
LGS was awarded the winner of the AODP in both 2010 and 2011.
Our response to the 2012 survey is available here
2) The Global Investor Survey on Climate Change. This survey has been developed by industry groups: the European Institutional Investors Group on Climate Change (IIGCC), the North American Investor Network on Climate Risk (INCR) and the Australia/New Zealand Investor Group on Climate Change (IGCC) as a benchmarking tool and best practice guide for asset owners.
- Please click here to review LGS’ response to the 2012 Survey.
- Please click here to review the industry-wide findings of the 2012 Survey
LGS Sustainable Global Sovereign Bond Mandate - New Innovative Approach
Local Government Super (LGS) has adopted a new strategy in regards the management of our global government bond assets which currently represents almost $170m and features in all our member investment strategies.
The new strategy is highly innovative in that it explicitly incorporates environmental, social and governance (ESG) risk analysis into all aspects of the investment process for selecting the bonds issued by global governments and their agencies.
We have attached an Investment paper to detail the approach taken by LGS and our external manager & ESG research provider. We also attach a paper that details the Investment & ESG Risk Profile for the portfolio.
Reporting on LGS sustainability initiatives
In this section, we invite viewers to click on the links below for more details on the performance of LGS' sustainability Initiatives
Australian Shares - Proxy Voting Report
LGS reports on how we voted on corporate governance resolutions at the shareholder meetings of ASX200 companies in which the fund has investments.
LGS Australian Shares - Engagement Report from Regnan
We also measure the success of the engagement programs run on our behalf via Regnan and ACSI that have resulted in some excellent turn around in corporate behaviour.
LGS Australian Shares - Engagement Report from ACSI - Current
We also measure the success of the engagement programs run on our behalf via Regnan and ACSI that have resulted in some excellent turn around in corporate behaviour.
LGS Property Portfolio - Sustainability performance
UNPRI Survey Results
Local Government Super is a signatory to the United Nations Principles of Responsible Investment (UNPRI) and participates in their annual reporting and assessment survey.
Two hundred asset owners from around the world participated in the 2011 survey and for the second year in a row, Local Government Super scored in the top quartile for overall governance, policy and strategy as well as all six of the individual principles*.
The Following documents are LGS submissions to the UNPRI Reporting & Assesment Survey and detail our approach to implementing the UNPRI principles.
LGS sustainability policy
This policy is regularly reviewed and approved by LGS.
Local Government Super Carbon
and ESG Risk Portfolio Audits
Introduction
LGS believes that environmental, social and governance (ESG) issues can have material impact on the investments we make on behalf of our members over the long term. We consider climate change to be possibly the greatest environmental risk that LGS’ investment portfolio faces.
As part of our approach to identifying ESG and Carbon risks in our investments, LGS has commenced sourcing external specialised research to undertake Carbon and ESG Portfolio Risk Audits on our listed Australian and International share holdings. In this our first report on Carbon and ESG Portfolio risks, we provide some findings based on LGS’ portfolio holdings as at 30 June 2011. This covers approximately 43% of our entire investment portfolio.
The audits are based on a methodology that applies a numeric score out of 10 (where a higher score denotes a better performance and less risk) as well as a rating methodology (seven tier scale where AAA (best); AA; A; BBB (Average); BB; B and CCC (worst)).
LGS is using these audits to assist us to develop and implement investment approaches that manage carbon and ESG risks in our portfolios. This is a long term and on going project. Specifically the Carbon and ESG Portfolio risks allow us to highlight:
- Risks across the entire listed share portfolio - how does LGS rate versus market benchmarks? Are there any ‘hot spots’ or large exposures to poor ESG/Carbon rated companies in high risk sectors?
- The performance of each of our external fund managers that we employ. This allows us to engage with the fund managers on companies and areas that may have high ESG and carbon risk to ensure these have been considered in the manager’s investment process.
This in turn will assist LGS to develop investment strategies, which we believe, will result in stronger long-term returns for our members. We look forward to disclosing the results of future Carbon and ESG Portfolio Audits.
*Scores have been calculated based on signatories’ self-assessment and using the scoring methodology approved by the PRI Assessment Group. Although a limited verification exercise was undertaken with a proportion of signatories, responses have not been independently audited by the PRI Secretariat, PRI Assessment Group, or any other third party. Individual results including comparisons to the overall results (quartiles) are indicative and do not imply an endorsement of signatory activity. While this information is believed to be reliable, no representations or warranties are made as to the accuracy of information presented, and no responsibility or liability can be accepted for any error, omission or inaccuracy in this information.