PRI signatories come together to kick off Australia collaboration network

It was standing room only at the inaugural United Nations Principles for Responsible Investment (UNPRI) Country Network meeting in Australia earlier this month. Over 60 representatives of UNPRI signatories attended the meetings held concurrently in Sydney and Melbourne. The strong attendance indicates the Australian investment community’s commitment to responsible investment. Close to 100 Australian asset owners and asset managers are now signatories to UNPRI. The Country Network aims to bring Australian signatories together to share and collaborate on ESG issues, particularly those of specific relevance to Australia. David Atkin, chief executive officer at Cbus, the Construction & Building Industry Superannuation Fund, and Australia’s representative on the UNPRI Board, highlighted the value of the initiative: “Australia has its own specific issues and challenges in the ESG arena, and establishing a Country Network will allow Australian signatories to better define and focus on these.” The Australian government’s response to climate change and the ongoing uncertainty surrounding the debate on the issues has been the focus of considerable investor attention over the past few years.Other ESG issues of particular relevance to the Australian market include the limited focus on supply chain issues in Asia, changing precipitation patterns resulting in both droughts and floods in different parts of the country, and a rather limited ethical consumer market. Atkin said the opportunities provided by the Country Network included initiating and leading work streams on these Australia-specific issues. He said it would also enable the co-ordination of activities such as investor engagement, voting and public policy action relevant to Australia via the UNPRI Clearinghouse, the on-line investor collaboration website. At the meeting, UNPRI signatories reflected on the somewhat mundane but nevertheless real challenge that vast distances and different time zones present when seeking to contribute to and participate in global PRI activities and present the Australian perspective on key issues. It is anticipated that through the Country Network Australian signatories will be able to coordinate and facilitate input into existing UNPRI activities without losing as much sleep! The Country Network will also provide more targeted education and implementation support to Australian signatories. This was demonstrated with presentations
from two leading Australian fund manager signatories.
Nick Edgerton, Manager ESG, Research & Engagement at Colonial First State Global Asset Management (CFSGAM), said ESG issues were being integrated within investment processes for listed Australian equities at the manager: “While staying true to our investment processes we have developed our analysts’ capabilities to understand where ESG issues fit into their stock assessment. We assist and ensure ESG issues are well embedded in these processes by incentivising our analysts through a series of key performance indicators (KPIs). For example, one of the KPIs encourages analysts to engage directly with their companies on ESG issues in their regular meetings and site visits. Analysts also identify a key ESG issue and over the course of the year engage the company on this issue with the aim of influencing the management. As part of the integration we are also focusing on the sell side. We are supporting and challenging brokers to improve the quality of ESG research through our panel system, ESG Research Australia awards and bespoke research requests.” Azhar Abidi, director, sustainability and responsible investment, at Industry FundsManagement (IFM), provided an insight into how IFM has approached the task of integrating ESG issues in unlisted infrastructure assets. Azhar said the process began with the establishment of an ESG Policy to clearly define what ESG means to IFM. The second stage involved the development of a framework to translate this policy into its due diligence processes. A key element of the framework is an ESG checklist comprising over 80 questions on topics such as climate change, water supply, labour relations and governance structures. Azhar said: “It is necessary to translate the high level ESG Policy statements into the pointier due diligence questions which will lead the analyst to make intelligent and rational decisions about what is material to their investment decisions. It is important that the analyst focuses on the meaty ESG issues that actually have an impact on the risk and return profile or value of the asset.” Judging from the overwhelming turnout at the event, Australian signatories clearly see the Network, which is scheduled to meet every six to eight weeks, adding value to their PRI membership. The Network is likely to be extended to include New Zealand PRI signatories later this year.
Joanne Saleeba is Director at Thrive Sustainability Services, Melbourne, Australia
Link to Thrive website