Prime Super believes that considering Environmental, Social and Governance factors (ESG) in the investment process helps establish investments risk and opportunities over the long term and delivers better long-term financial performance to our members.
Why we believe ESG is important
Considering ESG factors in the investment process helps in the establishment assessment of an investment’s risks and opportunities, particularly over the longer-term.
We believe that:
- ESG factors have the potential to affect the value of an individual asset and as such, the long-term returns of members of the Fund.
- Investment managers that consider ESG factors and the impact of such factors on investment returns are better placed to deliver long-term sustainable investment returns, and
- Ignoring ESG factors is potentially a source of risk in investments
How we manage ESG
Prime Super applies an ESG policy across all Investment options. Our investment process ensures that ESG factors are taken into account in all our investment decision. However, the integration of ESG considerations in our investment process does not mean the exclusion of particular companies on ethical grounds. Instead, our approach sees us use engagement and proxy voting to influence the behaviour of companies in which we invest.
That said, there are circumstances where a sector or stock are excluded if we consider that an investment is not appropriate for the Fund to the extent that it may have:
- Negative impact on the reputation of the Fund.
- Negative impact on the returns of the Fund.
Tobacco is currently excluded from the investment strategy of Prime Super.
- Tobacco - A direct investment in a manufacturer or distributor of tobacco and tobacco-related products is excluded from the investment strategy of Prime Super.
This exclusion applies to those companies where a majority of the business’s income or business assets are engaged in the production and/or distribution of tobacco and tobacco-related products. It does not apply to those businesses where tobacco is an ancillary element of the overall business,
such as retailers that sell cigarettes, which are a legal product in Australia.
In response to increasing understanding of the effects of climate change, Prime Super has developed a Climate Change Policy. A crucial issue for the globe and investments we now consider these issues on a regular basis.
Our Climate Change Position statement can be found here. And our Climate Change Policy detailing how we integrate climate risk and awareness in our investments and our own operations as a trustee can be found here.
Socially Responsible Investing
From 1 January 2019, Prime Super members can invest all or some of their balance and ongoing contributions into the Sustainable Responsible Investment (SRI) balanced option. The SRI option is for members who wish to more clearly incorporate their social and environmental values into their superannuation investments.
The SRI option includes positive screening, which means it seeks out companies that are perceived to have a positive impact on environmental, social, and governance considerations. It also seeks to avoid investments with a material business involvement in:
- the production of tobacco or alcohol;
- manufacture or provision of gaming facilities;
- manufacture of weapons or armaments;
- manufacture or distribution of pornography;
- directly mining uranium for the purpose of weapons manufacturing; and
- extraction of thermal coal and oil sands production.
More information on our SRI option is available here.