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Our investment governance.

As a superannuation fund, Hostplus’ primary duties are to:

  • deliver the highest possible return on our investments to our members; and
  • assess and manage all foreseeable risk factors as effectively as possible.

In order to meet these obligations, and to protect and manage our investments for the long-term, we recognise the need to consider environmental, social and governance (ESG) opportunities and risks in our investment decision‑making processes.

Hostplus believes that entities who prudently manage ESG opportunities and risks will deliver better long-term financial performance to their members.

We do this by encouraging our external fund managers to incorporate ESG considerations into their investment decision-making, as well as ensuring ESG factors – such as those outlined below – form part of our overarching investment strategy.

  • Environmental: Climate change, environmental impact of assets, renewable energy.
  • Social: Health and safety issues, labour practices, employee relations, diversity, human capital management.
  • Governance: Executive remuneration, benefits and compensation, bribery/corruption, board composition, shareholder rights, business ethics.

To find out more about our approach to ESG, you can view our ESG Policy.

ESG Policy

Introduction

Hostplus is a signatory to the Australian Asset Owner Stewardship Code (the Stewardship Code) and is pleased to have adopted all its six principles.

Being a signatory allows us to continue to proactively manage and disclose the stewardship activities we undertake on behalf of our members.

These activities are consistent with our desire to create value for members by influencing companies to change their behaviour in ways which protect and enhance long-term, sustainable value.

How we implement the six principles

Principle 1: Publicly disclose how the Fund approaches its stewardship responsibilities.

We disclose our approach to our stewardship responsibilities via our ESG Policy. Our ESG Policy has recently been revised specifically to align with the Stewardship Code. We also disclose our approach to stewardship on our website: https://hostplus.com.au/super/about-us/investment-governance.

Principle 2: Publicly disclose the Fund’s policy for voting at company meetings and voting activity.

In exercising our voting rights, Hostplus favours a pragmatic and commercial approach that considers the specific circumstances of each company on a case-by-case basis.

Our key voting beliefs are:

  • Board oversight: Boards should be composed of highly skilled, experienced and diverse directors who can provide oversight of management on behalf of shareholders. Together with management, boards should be accountable to shareholders for the company’s performance over the long-term.
  • Shareholder rights: Companies must not implement structures that infringe shareholder rights or that transfer value from shareholders to management or others.
  • Major transactions: Companies must ensure that major transactions (like capital raisings, mergers and acquisitions) are conducted with proper regard to existing shareholders’ interests.

Further details of our voting policy and its implementation for Australian and international equities are disclosed in Sections 2.1 to 2.3 of the ESG Policy. Our voting activity is disclosed on our website under the ‘Proxy Voting’ section at https://hostplus.com.au/super/about-us/investment-governance.

Principle 3: Engage with companies (either directly, indirectly or both).

In this context, engagement means two-way constructive communication between Hostplus and investee companies (board members and/or senior management) on matters such as the company’s performance, strategy, ESG issues, leadership, quality and level of reporting.

Given resource constraints, we primarily engage with companies collectively through the Australian Council of Superannuation Investors (ACSI) or via external investment managers. Collective engagement allows us to exert a greater influence (beyond our own shareholding in the company) and to manage resources more effectively.

Further details of engagement with companies are disclosed in Sections 2.6 to 2.10 of the ESG Policy.

Going forward, we have committed to annually disclose the priority themes and objectives of our collaborative engagement, and aggregate outcomes, on our website at https://hostplus.com.au/super/about-us/investment-governance.

Principle 4: Monitor asset managers’ stewardship activities.

Hostplus invests through specialist external investment managers, and their activities will therefore play a key role in our stewardship activities. Managers are expected to take all material risks and opportunities, including regarding ESG, into account when making investment decisions.

As part of the investment manager appointment and review process, together with our investment consultant, we review our managers’ ability to integrate ESG risks and opportunities into their investment-decision making processes.

Further details of our monitoring of asset managers’ stewardship activities are disclosed in Section 1 of the ESG Policy.

Principle 5: Encourage better alignment of the operation of the financial system and regulatory policy with the financial interests of long-term investors.

The rules governing the operation of financial markets and regulatory policy may not always be aligned to our members’ long-term interests. When this is the case, and where appropriate, we will engage policy makers (directly or via collaborative initiatives) and seek to address these issues.

Principle 6: Report to beneficiaries about the Fund’s stewardship activities.

Our ESG Policy is available to Hostplus members, employers, employees, service providers, investment managers and other interested parties on our website.

We report on our ESG activities and outcomes on an annual basis, including on voting and engagement activities outlined above, via our website and the Hostplus annual report.

 

“As a global long-term investor and signatory to the Principles for Responsible Investment, Hostplus acknowledges that climate change will have a wide range of consequences which may impact our investment portfolio. We are committed to improving our understanding of our fund’s exposure to material climate change risks across companies, sectors, regions and asset classes.”

Climate change is one component of Hostplus’ ESG considerations, however it is one of the largest economic challenges facing investors today – physically, socially and legally.

As a fund, we respect the concern and commitment shown by members of our community who are working to confront this problem, as well as those who have different investment preferences. While we share many community members’ belief in the importance of addressing climate change, we do not believe that full divestment from the fossil fuel industry is the best approach.

As individuals and as a community, we extensively rely on these companies’ products and services for so much of what we do every day – the heating and lighting of our buildings, fueling our transportation, as well as running our computers and appliances. As a long-term investor, it is difficult for us to reconcile boycotting a whole class of companies as we do not believe this represents a ‘silver bullet’ approach to the investment challenges posed by climate change.

Furthermore, divestment can cause company valuations to fall where they are more likely to shift from public markets to private equity funds, which have lower reporting obligations. Such a shift could hurt transparency and limit everyone’s ability to engage the management of these companies in discussion around climate change. We prefer to exercise these rights ourselves and that’s what our ownership of these companies allows us to do.

As a responsible trustee, we are committed to improving our understanding of our fund’s exposure to material climate change opportunities and risks across companies, sectors, regions and asset classes. Such risks and opportunities are complex, often global in nature, and addressing them effectively frequently entails collaborative approaches.

As a shareholder, we greatly favour engagement over withdrawal.

Hostplus pursues an active ownership program that engages with most ASX300 companies on ESG issues directly and collectively through the Australian Council of Superannuation Investors (ACSI).

ACSI seeks to influence companies through constructive engagement with their boards about material ESG issues, with the aim of promoting long-term shareholder value and minimising risk. Some examples of ESG risks discussed are board diversity and independence, remuneration report recommendations, carbon asset risk, human rights in supply chains and sustainability reporting disclosure.

By taking a proactive approach, we are positively contributing towards the accountability and integrity of companies, promoting a framework where organisations can be managed in the best interests of their shareholders.

We also take our proxy voting rights very seriously.

It is Hostplus’ policy to vote the proxy rights associated with all of our Australian and international equities holdings and we are committed to publicly disclosing all proxy voting records.

The latest record of Hostplus’ recent proxy voting activity is available below.

January to June 2018
International Proxy Voting Record
ASX Proxy Voting Record

July to December 2017
International Proxy Voting Record
ASX Proxy Voting Record

January to June 2017
International Proxy Voting Record
ASX Proxy Voting Record

July to December 2016
International Proxy Voting Record
ASX Proxy Voting Record

January to June 2016
International Proxy Voting Record
ASX Proxy Voting Record

July to December 2015
International Proxy Voting Record
ASX Proxy Voting Record

January to June 2015
International Proxy Voting Record
ASX Proxy Voting Record

July to December 2014
International Proxy Voting Record
ASX Proxy Voting Record

January to June 2014
International Proxy Voting Record 
ASX Proxy Voting Record

Hostplus is a signatory to the Principles for Responsible Investment (PRI).

These principles establish a collective international framework for institutional investors to integrate ESG considerations into their investment decision-making. We believe that the PRI provides an important universal framework for signatories to work together, learn from each other and to provide a collective voice on ESG issues.

Dedicated to responsible investing opportunities.

In addition to incorporating ESG considerations across our investment portfolio, we also offer our members a separate ESG investment option called Socially Responsible Investment (SRI) – Balanced. This option gives investors dedicated access to responsible investing opportunities across a wide range of asset classes, including shares, property, fixed income, infrastructure, alternatives and cash.

The option is managed within a responsible investment framework, combining traditional investment metrics with ESG criteria to identify investments that meet acceptable standards in areas such as environmental performance, social impact, ethics, labour standards and corporate governance.

Contributing more to local communities, the environment and our members.

We believe that innovative sustainable assets not only contribute to local communities and help to preserve the environment, they will also be profitable investments both now and in the future. Which means more money for our members to enjoy in their retirement.

Hostplus members are currently investing in a wide range of award-winning properties, infrastructure assets, and organisations which can be viewed below.

We have also committed over $550 million to venture capital including funds that are building water treatment systems, autonomous taxis and cars, and supporting clean energy funds to create new ways to produce, store, distribute, own and trade renewable energy.

Anglian Water

  • Announced as ‘Responsible Business of the Year’ at the prestigious Business in the Community Responsible Business Awards ceremony.
  • Recognised for placing social and environmental concerns at the heart of their strategy, demonstrating their commitment to sustainability, and embedding it in the culture of the entire business and supply chain.

313@Somerset Shopping Centre (Singapore)

  • Building and Construction Authority of Singapore Green Mark Platinum Award winner

Barangaroo South International Towers 1, 2 & 3, Sydney

  • 6 Star Green Star Design ratings
  • Targeting carbon neutrality in 2017 and net zero waste to landfill by 2020
  • The most sustainable development ever delivered by Lendlease.

Darwin Airport

  • The Airports Council International awarded the Asia-Pacific Green Airports Platinum Award to Darwin Airport for its $13 million solar farm project, which commenced generation in June 2016.
  • Recognised for commitment to achieving outstanding accomplishments in environmental projects across all Asia Pacific and Middle East Airports with less than 25 million passengers each year.

Caneland central redevelopment, Mackay, Queensland

  • 4 Star Green Star Retail Design certification representing ‘Best Practice’ in environmentally sustainable design

Green Square North Tower, Fortitude Valley, Queensland

  • Rated 6 Star Green Star As-Built and Design V2

500 Bourke St, Melbourne

  • Rated 5 Star Green Star Design and As-Built V2

UNSW Village, Sydney

  • Urban Development Institute of Australia award winner for sustainable development 2010.
  • Australian Institute of Architects award winner in the multiple housing category.

South East Water (UK)

  • Peter Parker Prize winner for Business Commitment to the Environment,  identifying the company as the most outstanding example of environmental best practice in the country;
  • The Green Organisation’s “Gold Green Apple Award” winner for its work to protect toads at its Offham Water Treatment Works.  The company built three ponds and numerous hibernation sites on its land in order to keep the toads from trying to cross the busy A275.

Sydney International Convention Exhibition and Entertainment Precinct (SICEEP)

  • Australia’s premier convention, exhibition and entertainment venue, International Convention Centre Sydney (ICC Sydney), was awarded LEED Gold, recognising its all-encompassing approach to sustainability.
  • First precinct in the world to be awarded the highest accolade of 6 stars under the Green Building of Australia’s Green Star Communities certification.
  • Won Gold for ‘Best Operational Project’ at the first-ever Partnerships Bulletin Public Private Partnerships Awards 2017. The awards celebrate outstanding achievements and projects within the PPP industry in the Asia-Pacific.

Freeport LNG (Texas, USA)

  • Ebby Halliday and Maurice Acres Business/Industry Award winner for environmental stewardship and community involvement activities. This award was given by Keep Texas Beautiful, a non-profit organisation whose mission is to improve community environment.

The Ponds Shopping Centre, Kellyville

  • Australia’s first 6 star Green Star Retail Centre Design v1 shopping centre

Investment manager allocations

Diversification is key to successfully managing risk.

As the saying goes, it doesn't pay to put all your eggs in one basket. The same is true for investing. The key to successfully managing risk is through diversification – or spreading your investments across a range of asset classes or types of investments, so you have exposure to different markets.

Hostplus understands that markets can fluctuate, which is why we invest in a wide range of assets diversified between countries, industries and asset types. We have a very high allocation to unlisted assets which typically provide strong, stable returns when equities markets turn.

Approximately 40 per cent of our Balanced portfolio is invested unlisted assets such as direct property, infrastructure, credit and private equity – compared with many of our peers who are heavily invested in liquid assets, such as bonds and cash.

For more information on our portfolio diversification, you can view our investment holdings across each asset class below.

Investment Holdings Disclosure Australian Equities

Investment Holdings Disclosure International Equities

Investment Holdings Disclosure Private Equity

Investment Holdings Disclosure Infrastructure

Investment Holdings Disclosure Property

Investment Holdings Disclosure Alternatives

Investment Holdings Disclosure Credit

Investment Holdings Disclosure Fixed Interest

Investment Holdings Disclosure Cash

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