What is your approach to managing ESG risks?

We believe that taking ESG risks into account during the investment process can improve returns and reduce risk for our members over the long term. Here’s how we do this:

• Investment strategy
  We carry out annual scenario analysis to help understand and assess the potential impact that adverse climate change scenarios could have on long-term investment returns and risk. We measure and monitor the exposure to ESG factors including carbon risk as part of our asset class reviews.
• Portfolio construction
  We measure the carbon exposure in our Australian shares and International shares portfolios annually as part of our net zero commitment. This helps us to understand the impact that targeting portfolio carbon reduction has on our portfolio.
• Investment manager selection and monitoring
  We assess the investment managers’ approach to ESG as part of the selection process and regularly speak with our appointed managers to understand how they integrate ESG factors into their investment decisions. We encourage them to act in a way that’s consistent with their stated approach.
• Company engagement
  We want our investment managers to use engagement as a tool to promote good ESG practices and improve ESG outcomes. Our managers do this by engaging with company management (either directly or via a collaborative approach) and by exercising proxy voting on our behalf.
• Engagement with consultants
  We expect our consultants to evaluate investment managers’ ESG proficiency when carrying out manager due diligence in relation to our investment portfolio.

Our ESG and responsible investment policy outlines our beliefs and approach to including ESG factors in our investment process.