Below is a reply to a query about UniSuper investments in Transfield specifically.
We draw your attention to the following extract, and ask why UniSuper “engaged” with Transfield before responding to members’s questions about their retirement savings. Was it directed to do so by the UniSuper Board? Is there a reason why UniSuper would consult with Transfield prior to consulting with its members whose funds they invest? Or indeed with those who are in Australia’s detention centres about what they think of Transfield’s risk assessment?
UniSuper has engaged with Transfield Services to understand the key issues at hand. To date, both major political parties in Australia have demonstrated a commitment to offshore processing as part of their immigration policies. It is our understanding that the company undertook a full risk assessment prior to tendering for the Manus Island contract and is well equipped to provide the requisite services given their experience in managing the Nauru offshore processing centre.
Date: Friday, 21 March 2014 10:29 AM
Subject:UniSuper – Investment Enquiry
Thank you for your enquiry, we appreciate our members taking an interest in their superannuation.
Before addressing your specific queries, we thought it might be useful to first provide some general context regarding how UniSuper’s equity investments are managed.
As a significant investor in Australia (and international markets), and as a fiduciary acting in its members’ best financial interests, UniSuper has a significant role to play in promoting responsible business practices amongst its investee companies.
UniSuper’s investment managers conduct detailed analysis of stocks before purchasing and will generally acquire a stock where they believe it has the potential to outperform the wider market. In doing so, investment managers are required to take a comprehensive view of all the factors that impact the value of a company (including ESG risks and opportunities) in deciding whether to buy or sell a stock. As such, ESG is a prominent theme for UniSuper and our fund managers are expected to consider ESG as part of their investment process.
Specifically, the integration of ESG considerations into the mainstream investment process seeks to ensure that ESG risks and opportunities are identified and analysed. Just because a company may not perform as well as it could from an ESG perspective does not preclude our fund managers from making an investment in such a company, provided they understand the risks posed. It is then through active ownership that we seek to drive change (i.e. by engaging with companies and exercising our right to vote on resolutions).
Socially responsible equities
With regard to our Socially Responsible investment options, UniSuper adopts a best of sector approach towards equity investing using the Dow Jones Sustainability Index and the DJSI Australia Index. These indices are sector neutral and seek to include companies in each industry sector (e.g. finance, food & beverage etc) that are assessed to have more sustainable and socially responsible practices than their peers. Each company within each sector is assessed, rated and scored on various environmental, social and economic criteria by RobecoSAM. To be included in the above indices, a company must receive a score in the top 10% of its sector. A range of matters are considered and these include environmental management, biodiversity impacts, product stewardship, labour practices, codes of conduct, transparency etc. Other than tobacco, no other industry sectors are screened out.
The advantage of a best of sector approach is that it does not limit investment to a narrow range of industries. In addition, it also seeks to encourage companies to improve their sustainability practices if they want to be considered for investment.
Further information with regard to our best of sector approach, together with the corporate sustainability assessment process undertaken by RobecoSAM is available on page 21 of the Investing for the future’ booklet, a copy of which is attached.
UniSuper does have a minimal exposure to Transfield Services across our mainstream equities holdings, via an externally managed passive portfolio designed to gain broad exposure to the Australian sharemarket. None of our active managers have exposure to Transfield Services. It is also important to note that Transfield Services is not currently included in either the Dow Jones Sustainability Index or the DJSI Australia Index and thus our socially responsible investment options have no exposure to the company.
UniSuper has engaged with Transfield Services to understand the key issues at hand. To date, both major political parties in Australia have demonstrated a commitment to offshore processing as part of their immigration policies. It is our understanding that the company undertook a full risk assessment prior to tendering for the Manus Island contract and is well equipped to provide the requisite services given their experience in managing the Nauru offshore processing centre. The company is also well placed to provide additional welfare support services as they have a demonstrated history of providing similar services to Australian defence force personnel. Transfield Services was not in active control of the Manus facility at the time of the riot in late February, and is currently transitioning to take on full control of the facility (expected by end March 2014).
Transfield Services demonstrates a strong commitment to corporate social responsibility and operates under its Code of Business Conduct.
Further information regarding the Manus and Nauru facilities is available on the Transfield Services website http://www.transfieldservices.com/page/Sectors/Property/Manus_and_Nauru_fact_sheet.
Should you have any further queries, please contact one of our Member Services Consultants by calling the Helpline on 1800 331 685.
Member Services Consultant
UniSuper Management Pty Ltd
T 1800 331 685
F +61 3 9910 6141
Level 35, 385 Bourke Street, Melbourne Vic 3000