VicSuper, the A$13bn (€9bn), 240,000-member Australian superannuation fund, is set to be one of the first pension funds globally to publish an Integrated Report for its members and other stakeholders as momentum for investors using the < IR > framework in their reporting continues to build.
It comes as industry body the Australian Institute of Superannuation Trustees (AIST) is developing its new Integrated Reporting Pension Fund network to create a framework to support pension funds using < IR > for their stakeholders. The group has had one meeting and at its next meeting it will look at network member VicSuper’s new report – to be released next month – for guidance.
Kirsten Simpson, Manager Corporate Sustainability at VicSuper, told RI the fund had been reporting on sustainability performance using the Global Reporting Initiative (GRI) framework for the last decade so it made sense to adopt the newly released Integrated Reporting framework principles this year.
She said VicSuper would be the first pension fund to publish an annual performance report, using the GRI G4 guidelines and the Integrated Reporting principles.
“We have learnt a lot from evolving our approach to reporting this year,” she said. “As part of our process we looked at how the GRI guidelines and the integrated reporting principles can work together. Our focus is now around materiality – reporting on the important issues for our business, our members, and our stakeholders.
“We built a model, using the Integrated Reporting capitals framework, to analyse how our business generates value. What we do and how this generates shared value for VicSuper and our stakeholders is clearly summarised in this year’s report.”
She said that the report would not use the ‘capitals’ language that features in the Integrated Reporting framework: “It is important that we use language that is easy for our members to understand. The language in the report is softer than the capitals but we are still talking about the same things.
“For example we talk about how we engage our employees and create the leaders of tomorrow. This is our human capital.“We also talk about how we build internal knowledge, capacity, resilience and know how. This is our intellectual capital.” Simpson said KPMG would assure the report’s non-financial component. The motivation comes from VicSuper’s leadership stance on sustainability and reporting: “We encourage the companies we invest in to report on their non-financial performance and we should follow the same lead.”
The most challenging aspect of integrated reporting, she said, was the measurement of non-financial value. “Sophisticated outcome-based measurement of non-financial value is complex. It is something that will evolve for us over time. We’re working closely with the AIST and our peers to learn from our experience.”
Eve Scheerlinck, Executive Manager, Leadership & Governance, at the AIST said it would brainstorm at its next meeting on how to apply the < IR > framework to pension funds. She said the network also hoped to be international. The driver to create the group was a newsletter by leading pensions academic Keith Ambachtsheer, who had called for pension funds to get involved.
The International Integrated Reporting Council (IIRC) is involved with the Australian network. Liz Prescott, Asia Pacific Head of Relationships at the council, said the IIRC and the network would have a dialogue to inform future versions of its framework – which is currently focused on large corporates but can be used by any organisation.
She added that the IIRC had been in talks with major pension funds in Japan, Malaysia, Singapore, and had spoken to the largest US pension fund CalPERS, about similar initiatives.
Paul Murphy, Executive Manager, Institutional Investments & Policy at the Australian Council of Superannuation Investors, said ACSI supports the Integrated Reporting Pension Fund network. “We are keen to understand how the lessons learned from the corporate reporting world can be applied to funds that are exploring ways to improve their own reporting to their members.” South African pension fund Sentinel published the first pension fund integrated report last year.