What is Responsible Ownership?
At Aware Super, Responsible Ownership means we integrate environmental, social and governance (ESG) considerations into our investment processes. We do this before we invest and continue during our ownership.
This approach helps us better manage risk and generate strong long-term returns for our members.
Why is it important?
We believe it is important to take ESG considerations into account, because a company’s approach to managing ESG risks and opportunities can have a meaningful impact on its long-term viability and success.
Over the long term, we think companies and assets with sound ESG management are more likely to increase in value. By contrast, companies that poorly manage ESG risks have the potential to diminish shareholder value and may also harm the broader community and environment.
What we do
Our Responsible Ownership approach has five focus areas:
- ESG integration
- Advocacy
- Stewardship
- Exclusions
- Impact
Environmental, social and governance integration
We integrate a consideration of ESG factors into our investment processes.
Here are some examples of key ESG factors we consider:
Environmental factors
- Climate change mitigation and adaptation
- Waste, pollution and contamination
- Water (e.g. availability and supply)
- Biodiversity and sustainable land use
Social factors
- Workplace health and safety
- Diversity and inclusion
- Adherence to international conventions
- Modern slavery/forced labour (both in company operations and supply chains)
- The effectiveness of a company in maintaining its ‘licence to operate’ and managing labour relations
- Product responsibility
Governance factors
- Board composition (diversity, expertise & independence)
- Executive remuneration
- Transparency & reporting
- Conduct & culture
- Technology & innovation
- Data privacy & cyber security
Our approach to ESG integration is not limited to a set-and-forget analysis of an investment, but rather is a holistic approach to assessing ESG risks and opportunities over an investment’s life. We do this by considering ESG factors in our asset and manager due diligence and selection when we first invest, and through ongoing monitoring. We consider the application and relative importance of ESG factors on a case-by-case basis.
When selecting investment managers, it’s important to determine how well they integrate ESG issues into their portfolios because this supports better long-term returns for our members. We focus on managers’ policies, alignment, transparency, process, and active ownership approach.
We have been recognised by the UN-backed Principles of Responsible Investment as leaders for our approach to manager selection, appointment and monitoring.
Advocacy and Collaboration
We believe we’re more effective and have a greater impact when we work together with industry associations and like-minded investors.
We have contributed to policy, advocacy, market development and education.
We have also encouraged change by making submissions to reforms (either directly or through our advocacy partners).
While we may share our insights in relation to ESG issues and their potential impacts on investments with other investors, we don’t rely on those other investors to make investment decisions for us.
Aware Super has been a signatory to the Principles for Responsible Investment (PRI) since 2008. The PRI is the world’s leading proponent of responsible investment for investors, and signatories are required to report publicly on their responsible investment activities. We do this through our Annual Responsible Investment Report and historically through PRI reporting.
You can see our most recent PRI Summary Scorecard and Public Transparency Report below.1
1Note that participation in the annual PRI Survey was voluntary in 2024. As a result, the most recent reports available are from 2023.
Stewardship: Engagement and Voting
Stewardship means actively monitoring and engaging with the companies we invest in and the fund managers we partner with.
We aim to positively influence the policies, behaviours and practices of the companies we invest in, in areas such as:
- climate change
- worker safety
- diversity
- company conduct and culture, and
- cultural heritage management.
As a large investor, we use our voting rights to support actions we believe will be beneficial and enhance value for our members.
Aware Super is a signatory to the Australian Asset Owner Stewardship Code. As a signatory, we have developed a Stewardship Statement which shows how we apply these principles.
For information on our Stewardship activity read our
Engagement through our partners:
Investment restrictions and exclusions
Our preference is to use engagement and proxy voting to positively influence the behaviour and ESG practices of the companies we invest in.
However, in some circumstances we do exclude or restrict a particular sector or company from our investment portfolios.
As a result, we have implemented the below fund-wide restrictions and exclusions1 which are applied subject to the notes outlined below:
- Tobacco
- In 2012 we were one of the first super funds to divest from tobacco, setting a precedent in the industry.
- We have no direct investments in tobacco manufacturers and/or producers which derive 5% or more of their revenue from the manufacture and/or production of tobacco products.
- Thermal coal
- We have no direct investments in companies generating 10% or more of their revenues directly from mining thermal or energy coal.2
- Controversial weapons3
- We have no direct investments in companies verifiably involved4 in the manufacture and/or production of anti-personnel mines, biological weapons, chemical weapons, cluster munitions, depleted uranium, incendiary weapons and white phosphorous weapons (whole systems or key components5).
- We have no direct investments in companies verifiably involved4 in, and deriving 5% or more revenue from, the manufacture and/or production of nuclear weapons (whole systems or key components5).
It’s important to keep in mind that:
- Our investment options may have a small indirect exposure to companies involved in these industries because the fund-wide restrictions and exclusions don’t apply to indirect exposures. This includes derivatives, exchange-traded products such as ETFs, securitised assets (financial products that give the holder exposure to a pool of loans, bonds or other debt products) and investment vehicles governed by an uncontrolled entity including, but not limited to, unit trusts and fund of funds via pooled vehicles.
- Companies that provide goods or services to companies generating revenue from tobacco products, thermal coal or controversial weapons, or that are involved in the distribution or deployment of these items, are not excluded.
- We rely on data provided by ISS STOXX to apply the fund-wide restrictions and exclusions for directly held liquid investments such as shares and bonds. For more information on the methodology that ISS STOXX applies in generating their data, please refer to their website. The documents that are most relevant include the ‘Energy & Extractives’, ‘Controversial Weapons Research’ and ‘Sector-Based Screening’ methodology and research process papers.6 For unlisted direct investments, an internal assessment is made.
- The implementation of these restrictions and exclusions may be affected by the accessibility and accuracy of data, or an error by an external service provider. This may result in inadvertent holdings, typically over the short term, in investments we are seeking to exclude. In the event that there is an inadvertent holding of an investment we are seeking to exclude, we will endeavour to divest as soon as reasonably practicable.
- We do not automatically exclude companies’ subsidiaries, joint ventures or bond issuers; each is assessed on its own verifiable involvement in the relevant activity. For example, if a company is excluded due to its involvement in controversial weapons, its subsidiary will not be excluded unless it is assessed to be verifiably involved in controversial weapons based on its own activities.
We may divest from other sectors, industries or investments without prior notice, in line with our Responsible Ownership Policy, as updated from time to time.
1 Note that the fund-wide restrictions and exclusions differ from the equivalent restrictions and exclusions for the Socially Conscious options. The Socially Conscious restrictions and exclusions are broader and the revenue thresholds for tobacco, thermal coal and nuclear weapons are lower. In addition, the Socially Conscious restrictions and exclusions apply to all investments other than derivatives. See Socially Conscious investment options for more information.
2 There are currently no directly held unlisted thermal coal mining assets within the fund. However, the trustee may acquire an interest in such assets as a result of a merger with another superannuation fund. If this occurs, the relevant assets will be sold at fair value as soon as reasonably practicable.
3 This exclusion does not apply to companies involved in the deployment of these types of weapons such as aviation companies.
4 For directly held liquid investments such as shares and bonds, this verification is undertaken by our ESG data provider ISS STOXX. For unlisted direct investments, an internal assessment is made.
5 A component is a key component if it plays an essential role in the functionality of the specified weapon system or is specifically designed or modified for the specified weapons.
6 Note that these document titles may change as ISS STOXX may update their website from time to time.
Measuring our positive impact
We believe one of the real opportunities for us as a responsible owner is developing a way to measure and monitor the impacts of our investments. One way we have responded to this opportunity is by creating our Positive Impact Measurement Framework and Sustainable Development Investing Assessment methodology.
Measuring this positive impact is critical to ensuring our investments are effective at instigating and maintaining change, compared to what would’ve happened without financing.
You can read more in our Responsible Investment Report.
Managing climate risk
As a responsible owner we invest for strong retirement outcomes for our members. We see climate change as one of the most significant long-term risks to our portfolio and, therefore, our members’ retirement outcomes.
Responsible Ownership outside of super
Our Responsible Ownership approach and Climate Transition Plan 2023 apply to the Aware Investment Funds.
Awards and recognition highlights**
- RIAA Responsible Investment Leader 2023
- 2023 Best Fund: Responsible Investment by Chant West*
- Rainmaker ESG Leader Rating 2023
- Ranked one of the top 10 funds in the 2023 GSR Leaderboard
- Ranked 7th (out of 59 global Pension Funds) in the Financial System Benchmark by the World Benchmarking Alliance
- One of only 30 global organisations invited to join the UN Global Investors for Sustainable Development Alliance
- We are a Signatory to Tobacco Free Portfolio’s Tobacco-Free Finance Pledge^