Colonial First State, as a Superannuation Trustee, has an Environmental, Social and Governance (ESG) Policy. The ESG Policy sets out the Trustee’s approach to managing ESG with respect to the MySuper options that it offers.
- How will the Trustee incorporate a consideration of ESG in the investment decisions that it makes?
The Trustee appoints investment managers to manage the underlying investments of each MySuper option. The Trustee does not directly manage the investments but has in place a robust governance process for assessing the capabilities of the investment managers.
The process of appointing or reviewing an investment manager includes consideration of the manager’s approach to assessing the effect ESG issues may have on the investments of the fund. The Trustee will consider the investment consultant’s ESG ratings of investment managers. The Trustee will also obtain policies from the investment manager relevant to the management of ESG issues and certifications of compliance with the relevant policies.
- How will the Trustee monitor the ESG exposure across its portfolio of investments?
The Trustee monitors the ESG ratings of each of the investment managers managing the underlying investments of each MySuper option. The ratings are also considered when appointing new investment managers.
- How will the Trustee act on ESG risks?
An appointed investment manager may decide to divest investments due to the manager’s assessment of the ESG risk inherent in the investment. The Trustee may also consult with investment managers from time to time to understand the risks of individual investments.
Additionally, the Trustee has the power to instruct an investment manager to divest specific investments if the Trustee considers the risk of the investment (whether it be ESG risk or other investment risk) is substantial and/or inappropriate for members of the fund to have a financial exposure to the investment.
- How will the Trustee report to its members on the actions it has taken in relation to ESG issues?
The Trustee may also provide information to its members through regular member communications, particularly if the Trustee has decided to divest exposure to a specific investment arising from its assessment of ESG risk.