Investment quality and sustainability
We focus on achieving sustainable financial outcomes for customers by investing in high quality businesses, and considering long-term risks holistically.
We have been pioneers in considering non-financial Environmental, Social, and Governance (ESG) issues for many years.
We engage with industry participants, specialist managers and service providers to increase the disclosure, transparency and availability of quality data to price and quantify these emerging risks.
We have an expansive and long-term view
We apply a very comprehensive and wide view of risks that can potentially impact your savings in the long-term. We believe that the most successful companies are those that consider all strategic influences on the long-term sustainability of their business, not just the short-term operational drivers of current profitability.
We assess the ecosystems that businesses operate in, because they can create substantial benefits or costs over time, sometimes dramatically and suddenly. These include environmental and social factors such as:
- carbon footprint
- modern slavery
- supply chains
- occupational health and safety
- pandemic and other global shocks
- geo-political tensions
- changes in economic, regulatory and financial market conditions.
Consistent with the United Nations guidelines, CSC uses a principles-based assessment of how our investment agents identify, pre-empt, mitigate or remedy the consequences of portfolio activities on natural (environmental) and human (social) capital. We believe that the capacity to strategically pre-empt and manage natural and human-capital considerations is a critical component of building and sustaining franchise value. These principles are set with reference to evolving international standards of responsible investing; our own internal standards; and developments across regulatory bodies and social attitudes.
For example, we invest in private healthcare companies that are providing a range of critical healthcare services to support the pandemic front-line such as clinics, pathology, aged care and pharmaceuticals. One of these companies is running a clinical trial for a potential COVID-19 vaccine. This investment also contributes to the United Nations Sustainable Development Goal (SDG) 3: Good health and well-being.
We aim to take a long-term sustainable view, not knee-jerk short-term reactions.
As a responsible asset owner, we believe our responsibility for our customers is to actively engage and support robust transitions from lower- to higher-quality practices over time within companies and assets.
We make genuine sustainable impact, rather than simplistic divestment
There are many facets to managing ESG risks because they are interdependent. We believe incremental, consistent changes are more effective in supporting robust and smooth transitions to a more sustainable future. We attempt to work with, rather than be in conflict with, the companies in which your superannuation savings are invested.
For example, CSC supports innovative health organisations through its private equity investments. One of the types of company we invest in specialises in life sciences. One of these investments is an organisation called Aimmune Therapeutics. The company’s research priority has been to help patients struggling with peanut allergies, and in February 2020, their ground-breaking work was approved by the Food and Drug Administration in the United States. This made it the first approved therapy for any form of food allergy.
By seeking out responsible investments and championing businesses from the beginning, CSC has supported a life-changing discovery, and one which will contribute to UN Sustainable Development Goal (SDG) 3: Good health and well-being.
Divestment is a last resort
We use divestment only when engagement with companies cannot reduce the risks to the long-term viability of the business and/or because the activity is contrary to Australian government regulations, sanctions, treaties or conventions such as tobacco manufacturers, cluster munitions, or undiversified companies that derive 70% or more of their revenue from thermal coal production/extraction.
Pure divestment strategies, based on thematics, leaves companies in the hands of short-term investors, with no net impact. Shorter-horizon investors may not support the decisions that company management need to take to forego some earnings today, for more sustainable earnings into the future. This philosophy is now widely acknowledged as an important responsibility for long-term investors by the following global best practice initiatives*:
- World Economic Forum’s blueprint for institutional investors
- UN-supported Principles for Responsible Investing (PRI) global responsible investment standards
- OECD guidelines for multinational enterprises
*CSC’s Chief Investment Officer (CIO) has served as the co-Chair of the World Economic Forum Global Future Council on Long-term Investing for many years – a role reflecting CSC’s proactive, thought leader approach to responsible investing and including ESG risks in our whole of portfolio risk assessment. She continues to contribute to global thought leadership through publications including the London School of Economics and Political Science library. Read her article about why organisational success depends on valuing higher quality, rather than simply lowest-cost routes to economic growth.
We vote in your best interests
We vote on all shareholder resolutions and always vote in our customers’ interest. This helps us to influence and achieve outcomes aligned to our customers’ interests. A proposal from a company may be in the interests of company management but not the customers of our funds. We always vote in a way that supports our customers’ long-term best interests. Our voting decisions support issues that are likely to provide positive financial outcomes to our customers over a long investment horizon.Read about our proxy voting policy and reports