LGS Stewardship Statement

1 July 2018 to 30 June 2019

At Local Government Super, our vision is to enhance the retirement income of our members

LGS is proud to be a signatory to the Australian Asset Owner Stewardship Code (the Code).

Stewardship means exercising ownership rights to preserve and enhance the long-term investment value for our members. LGS has a well-established active ownership policy as we believe there are positive social and environmental outcomes to be gained by being a responsible, long-term focussed steward of our members’ funds.

This Statement outlines how we define our commitment to the principles in this Code.

Principle 1: Asset owners should publicly disclose how they approach their stewardship responsibilities

At LGS our stewardship responsibilities are demonstrated by our voting activity, engagement with companies (directly and collaboratively) and in the consideration of stewardship capabilities of our external asset managers.

We proactively assess stewardship capability of all asset managers in the selection and appointment phase as well as part of our annual review processes.

For more information on how we disclose our activities please refer to:
Sustainable & Responsible Investment Policy
Active Ownership Policy
LGS RI Investment Snapshot 2019

Principle 2: Asset owners should publicly disclose their policy for voting at company meetings and voting activity

At LGS we take our ownership responsibility as a shareholder seriously. We are committed to being an active owner of our investments and believe that engaging with companies on environmental, social and governance (ESG) issues can address potential risks across our investment portfolio. This assists our obligations to provide strong, long term returns for our members while also providing benefits to the community.

We vote on a range of issues such as climate change disclosure, board independence, remuneration, human rights and diversity.

LGS displays leadership in public disclosure by posting voting decisions on our website before meetings. More information on our proxy voting activities, reporting and policy can be found here.

Principle 3: Asset owners should engage with companies (either directly, indirectly or both)

Our aim is to become a leader in increasing awareness and understanding of current and future ESG issues, improving governance standards and encouraging greater disclosure. We engage with the companies we invest in through a variety of channels:

1. Directly with company Chairs, board members and senior executive management
2. Indirectly via our asset managers, who engage with companies on our behalf
3. Collaboratively via our service providers: Australian Council of Superannuation investors ACSI (domestic) and CGI Glass Lewis (international)

LGS is a member of ACSI, which provides proxy voting recommendations for our Australian listed equity holdings. ACSI engages directly with companies on behalf of LGS to ensure we maximise our coverage and increase influence on important member issues.

Depending upon the nature of an issue and responsiveness of a company to engagement, we may sometimes escalate engagement activities. This may take the following form:

1. Expressing concerns with our asset managers
2. Submitting shareholder resolutions (co-filed)
3. Voting against relevant proposals at annual general meetings
4. Making a public statement or speaking at annual general meetings
5. Exiting stocks when holding them is no longer in our member’s best interests

For more information see our: Active Ownership Policy and Proxy Voting & Engagement Report.

Principle 4: Asset owners should monitor asset managers’ stewardship activities

We employ asset managers to manage the majority of our investments.

In the selection and appointment of asset managers we assess their approach to stewardship. This includes requesting proxy voting policies, actual voting outcomes and detailed engagement data.

Comprehensive annual reviews of asset manager stewardship capabilities are performed to ensure alignment with LGS policies. We review an asset managers’ voting activity for the relevant period, comparing it with LGS’ voting outcomes. We engage with our asset managers to ensure we capture all information in making independent, well informed voting decisions.

Principle 5: Asset owners should encourage better alignment of the operation of the financial system and regulatory policy with the interest of long-term investors

LGS believes in aligning the operation of the financial system and regulatory policy with the interests of long term investors. By working with other investors on key ESG issues, we will have a much greater impact on company activities and their long-term performance.

Our industry collaboration includes being a:

Principle 6: Asset owners should report to beneficiaries about their stewardship activities

We disclose comprehensive information about our responsible investment practices to our members. Some of our disclosures include:

• We disclose records of how we vote on all company meetings. See Our Proxy Voting page to view our Proxy and Engagement Report
• Responsible investment reporting page on our website includes: ESG and Carbon Footprint Reports; Responsible Investment Snapshot and UNPRI Reports including the Climate Transparency Report 2018
• Sustainability benchmarking surveys including: RIAA Responsible Investment Benchmark Report 2018 and Asset Owners’ Disclosure Project
• Annual Report (2017-2018)