Sustainable Investment Framework
We are pleased to announce the release of the Sustainable Investment Framework.
In line with the commitments set out in the Sustainability Plan 2017-2020, the Sustainable Investment Framework (SIF) outlines the University's approach to sustainability, particularly climate change, in its investment portfolios and processes. The SIF will therefore ensure that we integrate climate change risk more systematically into investment management.
The SIF was developed during 2017 with advice from Mercer Investments and approved by University Council on 13th December 2017. It is informed by local as well as global best practice, including the Australian Prudential Regulation Authority (APRA), UN-backed Principles for Responsible Investment (PRI) and recommendations from the global Financial Stability Board Taskforce on Climate Related Financial Disclosure (TCFD).
The objectives of the SIF
- The University believes that companies which effectively manage their Environmental, Social and Governance (ESG) responsibilities should deliver better risk-adjusted returns over the long term
- The SIF aims to improve investment outcomes by integrating ESG factors, including climate change risk and opportunity, into the investment decision-making process, consistent with the University’s fiduciary duties.
- The SIF also aims to improve the carbon footprint of the University’s listed equity portfolio where possible and compatible with its overall investment objectives.
The University’s approach is informed by its outsourced investment management structure, in which it is not directly involved in investment decisions. In the first instance, the University will assess and monitor the performance of each of its Fund Managers, using the following criteria:
- Awareness of climate change risk and potential impact
- Process for identifying, assessing and managing climate change risk as part of portfolio risk management
- Portfolio stress testing against scenarios, including a 2-degree Celsius scenario
- Identification of long-term opportunities linked to climate change
- Incorporation into investment decision-making
- Exercising of stewardship responsibilities to mitigate climate change risk
Performance assessment will also include a listed equity carbon footprint of the portfolio, focusing on the weighted average carbon intensity (WACI). The University may also identify individual listed equity investments for more in-depth material climate change risk assessment.
Investments determined to have a material climate change risk will be brought to the attention of the Fund Manager to determine an appropriate resolution, e.g. through engagement or disposal. If, on the basis of its overall assessment, the University determines that the Fund Manager is not appropriately integrating climate change risk and opportunity into its investment processes, the University will reassess its ongoing relationship with the Fund Manager. As a long-term investor focused on sustainability, the University is committed to responsible investment stewardship and active ownership, in order to improve the risk-adjusted return outcomes of the portfolio.