Climate change and investments update

Over the past year a number of members have contacted us to find out more about VicSuper's investments and the issue of climate change. We value having engaged members who are interested in better understanding how VicSuper operates.

Our fiduciary duty is to protect and grow our members' retirement savings by optimising long term risk-adjusted returns. As a responsible corporate citizen we are also committed to managing the social and environmental impacts of our business activities. In alignment with these considerations and in response to members concerns, we have undertaken a Climate Management and Investments Project.

The first phase of this Project has been completed and was presented to VicSuper's Investment Committee and Board in February 2015. It involved the analysis of member concerns and a concept paper on climate change issues and the potential implications for VicSuper's investments. The key conclusions include:

  • VicSuper addresses climate change risks associated with investing in fossil fuel and carbon intensive companies by integrating environmental, social and governance (ESG) factors into the investment process and by engaging with companies on their climate change management practices. This reflects the ESG Integration model.
  • We will undertake member sentiment research to assess potential member demand for an investment option that addresses climate change specifically by either divesting from fossil fuel and carbon intensive companies or by favouring companies that are actively working to reduce their climate change impacts. We will then undertake a business case to assess the viability of any potential climate-specific investment option. Please note that the ESG Integration model mentioned above will continue to apply for all other investment options.
  • We are committed to continue disclosing the carbon intensity of our equities portfolio. We have undertaken this analysis for the last seven years and during this time the overall carbon intensity of VicSuper's equity portfolio has decreased by approximately 8%. More information on the results of this analysis can be found on our website. We have also formally become a signatory of the global best practice Montreal Pledge.

We expect the second phase of this project will be completed in mid-late 2015. We will communicate the results and recommendations of this phase with our members once they have been endorsed by VicSuper's Investment Committee and the Board. Our objective is to have a public position on climate change that is consistent with investment implementation activities and backed up with transparent reporting on progress. We look forward to providing you with another update on our progress soon.

Regards


Michael Dundon
VicSuper CEO

Over the past year a number of members have contacted us to find out more about VicSuper's investments and the issue of climate change. We value having engaged members who are interested in better understanding how VicSuper operates.

Our fiduciary duty is to protect and grow our members' retirement savings by optimising long term risk-adjusted returns. As a responsible corporate citizen we are also committed to managing the social and environmental impacts of our business activities. In alignment with these considerations and in response to members concerns, we have undertaken a Climate Management and Investments Project.

The first phase of this Project has been completed and was presented to VicSuper's Investment Committee and Board in February 2015. It involved the analysis of member concerns and a concept paper on climate change issues and the potential implications for VicSuper's investments. The key conclusions include:

  • VicSuper addresses climate change risks associated with investing in fossil fuel and carbon intensive companies by integrating environmental, social and governance (ESG) factors into the investment process and by engaging with companies on their climate change management practices. This reflects the ESG Integration model.
  • We will undertake member sentiment research to assess potential member demand for an investment option that addresses climate change specifically by either divesting from fossil fuel and carbon intensive companies or by favouring companies that are actively working to reduce their climate change impacts. We will then undertake a business case to assess the viability of any potential climate-specific investment option. Please note that the ESG Integration model mentioned above will continue to apply for all other investment options.
  • We are committed to continue disclosing the carbon intensity of our equities portfolio. We have undertaken this analysis for the last seven years and during this time the overall carbon intensity of VicSuper's equity portfolio has decreased by approximately 8%. More information on the results of this analysis can be found on our website. We have also formally become a signatory of the global best practice Montreal Pledge.

We expect the second phase of this project will be completed in mid-late 2015. We will communicate the results and recommendations of this phase with our members once they have been endorsed by VicSuper's Investment Committee and the Board. Our objective is to have a public position on climate change that is consistent with investment implementation activities and backed up with transparent reporting on progress. We look forward to providing you with another update on our progress soon.

Regards


Michael Dundon
VicSuper CEO