ESG Activities

The PRI Initiative

The Principles for Responsible Investment (PRI) reflect the view that environmental, social and corporate governance (ESG) issues can affect the performance of investment portfolios. Because our aim is to always act in the best interest of our members, and because we believe that applying these Principles can help align investors with the broader objectives of society, we became a signatory of the PRI in 2006. Since that time we have adopted these Principles in our investment practices, where consistent with our fiduciary responsibilities.

The six Principles for Responsible Investment are:

PRI1

We will incorporate ESG issues into investment analysis and decision-making processes.

PRI2

We will be active owners and incorporate ESG issues into our ownership policies and practices.

PRI3

We will seek appropriate disclosure on ESG issues by the entities in which we invest.

PRI4

We will promote acceptance and implementation of the Principles within the investment industry.

PRI5

We will work together to enhance our effectiveness in implementing the Principles.

PRI6

We will each report on our activities and progress towards implementing the Principles.

The following is a list of activities we have engaged in as part of our commitment to integrating the Principles into our investment practices.

Incorporate ESG issues into investment analysis and decision-making processes.

  • Maintain and publish our ESG policy.
  • Incorporate ESG into our manager selection process.
  • Measure ESG exposure of investments where practicable and incorporate in risk process.
  • Encourage managers and advisors to maintain ESG policies.

Incorporate ESG issues into our ownership policies and practices as an active owner

  • Encourage service providers to include ESG factors as part of broader risk analyses.
  • Include ESG risk analysis as part of real asset investment recommendations and ongoing review.

Seek appropriate disclosure on ESG issues by the entities in which we invest.

  • Maintain and publish our proxy voting policy.
  • Exercise voting rights in all instances wherever practicable.
  • Work with advisors on shareholder engagement.
  • Where possible and appropriate, collaborate with other shareholders.
  • Encourage companies to disclose ESG policies, practices and performance.

Promote acceptance and implementation of the Principles within the investment industry

  • Encourage companies to disclose ESG policies, practices and performance.
  • Work with key ESG relationships and collaborate with other investors to request ESG information from companies.
  • Encourage managers and advisors to maintain ESG policies and publicly publish ESG policy and activity.

Work together to enhance our effectiveness in implementing the Principles.

  • Work with key ESG relationships and collaborate with other investors to include ESG principles in regulatory or policy reviews.
  • Incorporate ESG reporting requirements into investment management agreements.
  • Provide managers with a copy of CSC’s ESG Policy and instruct managers to use their best endeavours to act consistently with the policy.

Report activities and progress towards implementing the Principles.

  • Publish ESG and proxy voting policies.
  • Publish ESG activity reports annually.
  • Publish proxy voting activity statements semi-annually.
  • Inform members of ESG and proxy voting activity.

Montreal Carbon Pledge

CSC is a signatory to the PRI Montreal Carbon Pledge which aims to increase investor awareness, understanding and management of climate change-related impacts, risks and opportunities. We are committed to measuring and disclosing, on at least an annual basis, the carbon footprint of our equities portfolio.

As the table below indicates, CSC’s public market equities portfolio’s carbon footprint (as at 30 June 2016) is estimated to be lower than its benchmark by 4 tonnes of CO2 emissions per AUD million invested.

CSC Listed EquitiesCSCBenchmarkDiff
Carbon Footprint* 134 138 -4
Coverage** 89%  93% -4%

*   Carbon Footprint is measured in Tonnes of C02e (Scope 1 + Scope 2) per AUD million invested (as at 30 June 2016).

** Carbon emissions data is sourced from MSCI ESG Research and covers the MSCI ACWI universe of companies. For more information see their website.

Collaborative relationships

CSC has developed collaborative relationships with other domestic and international investor groups in order to:

  • engage with investee companies to increase advocacy and participation in the public policy debate
  • initiate and advance the ESG research agenda
  • promote increased corporate governance standards worldwide
  • address the risks and opportunities associated with climate change and monitor the public policy response to it.

The table below details these collaborative relationships and outlines the purpose for our engagement.

Industry collaborationAim
Principles for Responsible Investment (PRIs)

To provide a web-based clearinghouse for collaborative initiatives.

To facilitate networking among members through educational and information sharing activities.

To support members in meeting their commitments to the PRIs.

To assist members in the practical management of ESG risk.

To support engagement with investee companies facilitating advocacy and participation in the public policy debate.

To maintain a research agenda on key governance related matters, ensuring that industry views and positions are soundly based on fact. Areas they research include:

  • executive remuneration
  • risk management
  • management of extra-financial risk, including material ESG risk such as climate change
  • board succession planning
  • board and director performance
  • disclosure of performance issues.
Regnan Governance Research and Engagement

To support sustainable long-term performance of ASX-listed companies via its collective engagement service.

To provide rigorous research identifying relevant ESG risks.

Carbon Disclosure Project (CDP)

To develop and maintain a global database of primary corporate climate change information.

Carbon Disclosure Project Carbon Action

To accelerate cost effective company action on carbon reduction and energy efficiency activities which deliver a satisfactory return on investment.

Carbon Disclosure Project Water Disclosure

To engage with companies worldwide to disclose and ultimately manage water issues in order to create and sustain long term shareholder value, focusing on sectors that are water-intensive or are exposed to particular water-related challenges.

Carbon Disclosure Project Forest Program

To understand how companies are addressing their exposure to deforestation risks including unsustainable forestry practices from their supply chains.

Global Institutional Governance Network (GIGN) 

To exchange information on share ownership and opinions on corporate governance issues, with a view to exercising effective and constructive influence to improve long term shareholder value.

Montreal Carbon Pledge

Investors commit to measure and publicly disclose the carbon footprint of their investment portfolios on an annual basis.

MSCI ESG Ratings Benchmarking

We analyse the ESG risk exposure of our investments to enable us to develop and maintain an appropriate risk management process that is in line with our long-term investment goals. Our analysis is across our entire portfolio, giving us a broad-spectrum perspective.

To analyse ESG risk on our portfolio, we use MSCI ESG Ratings scores to measure three facets of our listed equity portfolio (environmental, social and governance) as well as an aggregate ESG score, which is determined relative to industry peers.

The chart below shows the ESG ratings of our listed equity portfolio using MSCI ESG ratings data and compares this to a common broad-equity benchmark for the asset class, the MSCI All Countries World Index.  The data is as at 30 September 2015.

The chart shows our listed equities portfolio has higher ratings on average than the benchmark, meaning our portfolio bears less ESG risk than solely replicating the MSCI All Country World Index.

MSCi ESG Ratings Graph

Enhancing the sustainability of our properties

Our investment managers for our nine directly-owned properties have incorporated sustainability principles and initiatives into their investment processes and day-to-day property management. Sustainability initiatives have materially reduced the energy and water consumption of these properties.

Examples include:

  • Installing sub-metering within buildings in order to accurately measure energy and water usage across base building services and individual tenants.
  • Obtaining National Australian Built Environment Rating System (NABERS) energy and water ratings for each of our office investment properties. NABERS measures a building’s operational impact on the environment. The ratings provide a simple indication of how well these impacts are being managed.
  • Appointing a specialist environmental sustainability consultant to assess each building and identify measures that can reduce energy and water usage and increase NABERS Energy and Water ratings. The consultant report forms the framework for improving the environmental sustainability performance and rating of each building.
  • Actively exploring government funding initiatives/grants to reduce the cost of sustainability initiatives.

November 2015