Responsible investing at BUSSQ
Environmental, social and governance (ESG) issues, present risks and opportunities that have the potential to impact investment returns.
BUSSQ, considers itself a long-term investor and believes its members will be best served by investing in a sustainable and responsible way. Where appropriate, we will consider ESG factors in our investment decision making and ownership policies.
Our approach
The broad investment objective of the Trustee is to maximise investment returns, after considering the risks associated with various types of investments. ESG considerations are one of several factors that form part of the risk assessment when appointing external investment managers or investment strategies. BUSSQ considers the overall cost, risk and opportunity of a decision, against the benefits of the expected outcome.
Some of BUSSQ’s assets are invested in pooled funds and therefore, the responsible investment decision making is determined by the investment managers of those funds, with BUSSQ advising our views and preferences where it considers this to be appropriate. BUSSQ will otherwise rely on the managers to take ESG risks into account as they consider appropriate.
Appointing and monitoring investment managers
ESG issues are one of many factors considered when assessing and appointing investment managers. As part of the selection process, BUSSQ and our investment advisor assess the extent to which the manager integrates ESG issues into its decision making processes. This information forms part of the overall suitability assessment of the investment manager.
Ongoing monitoring of our investment managers includes their ESG integration and progress. This is formally assessed as part of our investment advisor’s overall annual review, and ESG consideration is a standing point for discussion with our investment managers. Any issues that arise, including significant changes or inaction on a manager’s behalf, may impact our overall assessment of that manager.
United Nation’s Sustainable Development Goals
As part of our ESG assessment, we also incorporate the United Nations (UN) Sustainable Development Goals1 (SDGs) into our investment decision making process. The UN SDGs are global goals to achieve a better and more sustainable future. They cover social and economic development issues such as poverty, health, education, climate change, gender equality, clean water and sanitation, affordable clean energy, urbanisation and social justice.
BUSSQ has selected the below UN SDGs as goals that align broadly to the building and construction industries:
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The purpose of this goal is to provide access to affordable, reliable, sustainable, and modern energy for all. A well established energy system supports all sectors: from businesses, medicine and education to agriculture, infrastructure, communications, and high technology. |
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The purpose of this goal is to promote inclusive and sustainable economic growth, employment and decent work for all. Sustained and inclusive economic growth can drive progress, create decent jobs for all and improve living standards. |
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The purpose of this goal is to make cities inclusive, safe, resilient, and sustainable. This includes basic services such as transportation and water. We have investments in public transportation and water infrastructure that treats wastewater and provides clean water. |
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The purpose of this goal is to take action to tackle climate change and its impacts. |
In our Annual Report, BUSSQ will report on the percentage of Fund assets positively impacting these SDGs, noting these percentages are not used to assess new or existing investments. We have not set a specific target, and these percentages may increase or decrease over time. In 2022/23 three of the four SDGs slightly decreased. The percentages are reviewed annually as part of our investment strategy to determine if these align to our overall ESG objective.
The percentages are calculated by our investment advisor by reviewing the portfolio holdings from each investment manager of listed equities, and individual underlying assets for real assets2 and in 2022/23 this was calculated against approximately 76% of the total fund assets These are mapped to the above SDGs and some investments are mapped to multiple goals. How the percentage is calculated may also change over time.
Net zero and climate change
The Trustee considers that climate change may have a negative impact on the portfolio due to its impact on the environment and society. The Trustee believes it is appropriate to investigate and manage this risk in the portfolio. BUSSQ incorporates climate change issues where measurable into investment processes and decision making, including:
- seeking to understand the impact of relevant climate change risks and opportunities prior to new investments and within each of the major asset classes;
- considering climate change risks and opportunities in the structure of the portfolio.
Whilst BUSSQ has not yet developed a target and policy on net zero, the Trustee encourages our underlying investment managers to develop their own policy and action plan to move to net zero. Additionally, we have invested through the below investment managers with strategies that either tilt to resource efficiency and/or lower carbon emissions or assist in the clean energy transition. These include:
- Investment in SDCL Green Energy Solutions Fund – an opportunistic infrastructure manager who specialises in bespoke energy solutions for business.
- Partnering with Osmosis Investment Management – a listed equity manager who uses proprietary research to tilt the portfolio to companies with efficiencies in the management of carbon, water and waste.
- Investment in Montrusco Bolton International – a manager that excludes fossil fuel from their investments.
- Investment in Harbourvest Partners Stewardship Associates – a private equity “Co-Investment” Fund, with both financial and positive ESG investment objectives.
In the 2021/22 Annual report and 2022 Annual Member Meeting minutes, there was some ambiguity on how we reported the approach of investment managers towards net zero. To clarify, we confirm that some of the Funds infrastructure, property and agriculture investment managers have made progress with their focus on sustainability, and outlined a roadmap to net zero by 2050. One of our agricultural investment managers (Macquarie) has made a 2040 commitment to net zero.
Investment Exclusions
BUSSQ prefers its investment managers to have a broad investment opportunity and only exclude in limited circumstances. Please see our Portfolio Holdings Disclosure for more information on all investments*. Our current exclusions are:
- Investments in companies classified as being in the tobacco industry according to the Global Industry Classification Standard (GICs) – GICs code 302030 are not permitted. This does not exclude packaging, sales or distribution#.
- Montrusco Bolton International’s ex Fossil Fuel mandate where the manager invests primarily in common shares of companies having no oil, natural gas or coal reserves.
Active Ownership
Active Ownership refers to ownership where influence is exerted on investee companies . BUSSQ undertake this through proxy voting on resolutions and where appropriate engaging indirectly through our external investment managers on their policies and practices, including ESG issues. The aim of this voting is to improve management and performance and enhance long term investment returns. For more information, see BUSSQs proxy voting records.
How can you find out more?
Responsible investing policy
Proxy Voting records
Portfolio Holdings disclosure
1 www.un.org/sustainabledevelopment/sustainable-development-goals
2. Real assets include property, infrastructure, and agriculture. Our investment adviser uses a combination of NABERS as well as sector/sub-sector classifications in the percentage calculation for Property, and for infrastructure and agriculture this is a more qualitative/rules-based approach which is documented by the investment adviser to enable monitoring over time.
* Oil, gas and coal are not generally excluded from our investments
# Our pooled investments have explicit tobacco exclusion with the exception of Sands Capital that may not hold investments that manufacture tobacco products or derive more than 20% of their latest revenue from retails sales/ distribution of tobacco products, or supplying products essential to the tobacco industry (revenue is based on analysis of the financial statements of each company and sourced by MSCI).