We always strive to achieve the best investment returns for our members, and we do so responsibly
Our approach to responsible investment
Catholic Super was one of the first to adopt the Principles of Responsible Investment (PRI). The Principles are an initiative backed by the United Nations and provide a framework for the investment community to achieve better long term investment returns and more sustainable markets using Environmental, Social and Governance (ESG) criteria. Signatories agree to:
- Incorporate ESG issues into investment analysis and decision-making processes
- Be active owners and incorporate ESG issues into their ownership policies and practices
- Seek appropriate disclosure on ESG issues by the entities in which they invest
- Promote acceptance and implementation of the Principles within the investment industry
- Work together to enhance the effectiveness of implementing the Principles
- Each report on their activities and progress towards implementing the Principles
To achieve these objectives, the Fund works with other investors to establish a constructive dialogue with corporations to ensure that they are properly managing their environmental, social and governance (ESG) risks. Being mindful of ESG principles lowers the overall level of risk and helps ensure long-term sustainability. Some of these risks include:
- Climate change - carbon emissions
- Excessive executive remunerationxq
- Poor corporate governance
- Occupational health and safety
- Human capital management
- Poor or unacceptable business operations (i.e. engaging child-labour or inadequate environmental clean-ups)
Having a PositiveIMPACT
Some members may want to focus their super investment on the part of our existing portfolio which has the clearest and most tangible environmental and/or social impact, and may be comfortable with a lower level of diversification than that contained in our other options. We’ve created a PositiveIMPACT option for those members. With a 10-year return objective similar to our Balanced option and a risk profile similar to our Aggressive option, the actual benefits of PositiveIMPACT aren’t only with your super: visit our PositiveIMPACT page to learn how your super can have social and environmental benefits.
Global Energy Efficiency and Renewable Energy Fund (GEEREF)
A few years ago, Catholic Super made an investment in the Global Energy Efficiency and Renewable Energy Fund (GEEREF). Many developing countries lack reliable electricity and rely on diesel generators, kerosene lamps and wood fires, which impact their health, environment and economic outcomes. Therefore, GEEREF has important social, environmental and development benefits, particularly in rural areas.
Climate change risks and opportunities
The Fund believes that climate change is a major, systemic risk that could destabilize global economies and investment markets to a significant degree. In addition to systemic risk, there will be winners and losers at the national, regional and individual company and asset level. Consequently, institutional investors like us need to be vigilant and proactive in assessing and managing these risks as part of their fiduciary duty to members.
Public policy action is needed to achieve the global policy commitments and efforts to limit the increase in global world temperatures to no more than 2 degrees Celsius above the pre industrial average. Indeed, the Fund believes that a +2 degree outcome would still pose a significant economic, social, environmental and investment risk and is supportive of more ambitious targets and efforts by policy makers to stay below this level.
The Fund believes that the global climate change mitigation (emissions reduction) commitments from governments, companies, investors and civil society will support ongoing actions around the world to reduce carbon emissions and improve energy efficiency, with a high degree of variability and uncertainty as to the outcomes of these actions across different regions, countries, asset classes and companies that will need to be assessed and managed.
We manage these risks and capture the opportunities through a number of ways, including:
- Collaborating with other investors through engagement with companies
- Collaborating with other investors through engagement with policy makers to encourage strong and concerted policy action, such as through our membership with the IGCC
- Measuring and reporting our carbon footprint and carbon intensity of the equity portfolio, including signing the PRI led Montreal Carbon Pledge to measure and report the carbon emissions and intensity of equity portfolios
- Engaging with our fund managers to encourage greater awareness and integration of climate risk into investment processes. In 2015 we undertook a review and carbon intensity assessment of the Fund’s listed equity managers and will continue the dialogue to improve practices
- Supporting research initiatives to improve knowledge and skills
- Investing in low carbon, energy efficient opportunities and reporting these through the low carbon investor registry
Collaboration and ESG engagement
Internationally, Catholic Super utilises the Reo engagement service provided by the Bank of Montreal (formerly F&C).