VicSuper’s Socially Conscious investment option is what’s known as a socially responsible investment option. It provides our members with the opportunity to invest their super savings in alignment with their social and environmental values.
VicSuper’s Socially Conscious investment option has been certified by RIAA (Responsible Investment Association of Australia) according to the strict operational and disclosure practices required under the Responsible Investment Certification Program.
The Socially Conscious investment option is available to VicSuper’s FutureSaver and Flexible Income members. It is not offered via VicSuper’s Guaranteed Income Products.*
* VicSuper relies on Challenger Life Company, under life policies issued to VicSuper by Challenger, to fund payments to members who select these products. VicSuper does not itself provide a guarantee.
VicSuper’s Socially Conscious investment option incorporates a wide range of explicit social and environmental objectives.
The Socially Conscious investment option aims to help our members:
- take action on climate change by not investing in companies that hold fossil fuel reserves used for energy purposes;
- minimise social harm by not investing in companies that are materially involved in activities that potentially cause social harm, for example tobacco production, alcohol, gambling, military weapons, civilian firearms, nuclear power, adult entertainment and genetically modified organisms;
- protect human rights, labour rights and the environment by not investing in companies that have been involved in severe incidents and/or controversies, or have been found to not be adhering to widely accepted global conventions.
The objectives are achieved by applying a number of exclusionary screens when selecting companies for investment. These exclusionary screens only apply to the equities and fixed interest components of the investment option. We may introduce additional screenings in the future. Investments across the other asset classes apply an environment, social and governance (ESG) integration approach, with the exception of Cash, which is not subject to ESG integration. Find out more about ESG integration in a question below.
The following table outlines the exclusionary screens applied to the equities and fixed interest:
| Socially Conscious investment options - environmental and social objectives and exclusionary screens |
| Take action on climate change |
Excludes investment in companies:
- with coal, oil and/or gas reserves used for energy purposes
- deriving 30% or more revenue from mining of thermal coal or thermal coal based power generation1
- whose principal business revenue is derived from direct fossil fuel activity in the following GICS2 sectors: Integrated Oil & Gas; Oil & Gas Exploration & Production; Oil & Gas Refining & Marketing; Coal & Consumable Fuels; Oil & Gas Storage & Transportation; Oil & Gas Equipment & Services.1,3
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| Minimise social harm |
Excludes investment in companies materially4 involved in:
- Tobacco
- Alcohol
- Gambling
- Military Weapons (cluster munitions, landmines, depleted uranium, biological/chemical1, nuclear, conventional)
- Civilian Firearms
- Nuclear Power
- Adult Entertainment
- Genetically Modified Organisms
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| Protect human and labour rights and the environment |
Excludes companies that have been found not to be adhering to international norms represented by the:
- UN Declaration of Human Rights
- ILO Declaration on Fundamental Principles and Rights at Work, and
- UN Global Compact.
Excludes companies that have been involved in significant5 environmental, social and governance controversies.
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1 This criteria applies to equities only.
2 The Global Industry Classification Standard (GICS) is an industry taxonomy developed in 1999 by MSCI and Standard & Poor’s (S&P) for use by the global financial community.
3 Companies who demonstrate that they are transitioning to clean energy may remain investable.
4 Materially means the company generally derive greater than 5% revenue from the activity.
5 For equities, companies with MSCI controversies score of 3 or below are excluded. For fixed interest, companies with a score of 0 are excluded.
The equities component of VicSuper’s Socially Conscious investment option invests in companies sourced from a custom index prepared for VicSuper. The custom index combines the MSCI Global Fossil Fuels Exclusion Index and the MSCI Global Socially Responsible Index plus an additional fossil fuel direct activity screen. After applying the exclusionary screens listed above, a best‐in‐class selection1 process is applied to the remaining equities in the selection universe.
For detailed methodologies and criteria for the applicable MSCI Indices see:
The additional fossil fuel direct activity based screen excludes companies that operate in the following GICS
2 sub-sectors: Integrated Oil & Gas; Oil & Gas Exploration & Production; Oil & Gas Refining & Marketing; Coal & Consumable Fuels; Oil & Gas Storage & Transportation; Oil & Gas Equipment & Services.
1 Companies are rated using MSCI’s ESG rating methodology. MSCI ESG Ratings identify companies that have demonstrated an ability to manage their ESG risks and opportunities. Companies with an ESG ratings score below a specified threshold will not be selected for investment
2 The Global Industry Classification Standard (GICS) is an industry taxonomy developed in 1999 by MSCI and Standard & Poor's (S&P) for use by the global financial community.
The fixed interest component of VicSuper’s Socially Conscious investment option invests in a range of securities. For Australian fixed interest, where the option invests in company issued securities, VicSuper is invested in an ESG Australian bond index fund. For international fixed interest, VicSuper is invested in an ESG Global bond index fund. Both funds implement customised indices. The ESG Australian bond index fund uses a Bloomberg Barclays MSCI Australia 100mn ESG weighted SRI Select Index. The ESG Global bond index fund uses a Bloomberg Barclays MSCI Global Aggregate SRI Select ex-Fossil Fuels Index (AUD hedged). Both apply very similar exclusions those applied to equities investment including non-government securities associated with fossil fuels, alcohol, tobacco, gambling, adult
entertainment, genetically modified organisms, military weapons, civilian firearms and nuclear power, as well as companies with an MSCI controversies score of 0. In addition, the ESG Global bond index fund excludes Treasury and Government-related issuers with an MSCI ESG Government rating below
BB1.
For detailed information on the Bloomberg Barclays Index exclusion methodology and ESG weighting methodology see:
1 Countries are rated using MSCI’s ESG Government rating methodology. MSCI ESG Government ratings identify a country’s exposure to and management of environment, social and governance risk factors.
The Principles for Responsible Investment (PRI) defines ESG integration
1 as the systematic and explicit inclusion by investment managers of environmental, social and governance factors or issues into traditional financial analysis.
ESG Integration requires the consideration of qualitative and quantitative ESG information in investment processes, with the objective of enhancing investment decision-making. ESG analysis is used to inform economic analysis and industry analysis. It includes analysing how ESG issues can affect a company or an assets financial value by affecting costs, revenues and business growth assumptions.
1 PRI Reporting Framework 2018
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