Local Government Super is the largest 'whole of fund' certified responsible investor in Australia with investments across Australian and international shares, property, infrastructure, fixed income, private equity and absolute return asset classes.
There are currently only five superannuation funds that have gained certification in RIAA's Superfund Whole of Fund category. This means that aside from all of the required disclosures related to responsible investment strategy, holdings and performance, these superannuation funds also have at least 75% of their total fund, across all assets, managed under at least two responsible investment strategies.
Local Government Super invests on behalf of our members in a range of assets using a responsible investment approach. We believe that this approach minimises risks, generates better long-term returns and is in line with our members’ interests.
At LGS, taking an RI approach means integrating environmental, social and governance (ESG) considerations into the investment decision making process. To ensure we effectively manage potential ESG risks we use the following strategies:
- Negative screens - we will not invest in controversial industries and limit our exposure to activities which we view as long term investment risks e.g. tobacco, weapons, gambling and some fossil fuels.
- Positive screens - we seek out investment opportunities that have a positive social and/or environmental impact on society e.g. renewable energy generation, recycling and sustainable agriculture.
- SRI overlay - we short sell or replace stocks when our fund managers are unable to direct funds away from controversial or high risk companies through investments in co-mingled trusts.
- Investment practices - we monitor our investments for ESG risks and engage with our fund managers and advisors on how to integrate ESG considerations into the investment process.
- Company engagement - we actively engage with companies about ESG issues through one-on-one meetings, briefings, phone calls and letters.
- Proxy voting - we undertake voting at shareholder meetings for the companies we invest in and publish our decisions before meetings to ensure transparent voting practices.
- Industry collaboration - We work with the superannuation industry to advocate for change on environmental, social and/or governance risks across industries.
- Transparency - we disclose comprehensive information about out sustainable and responsible investment practices to raise awareness about how we manage our members' retirement savings.
- Divestment - occasionally we utilise divestment to minimise our exposure to ESG risks that we believe could have a material impact on company's financial performance or society more broadly. Divestment is used as a last resort following comprehensive engagement.