We believe the effective management of environmental, social and governance risks and opportunities will support our requirement to maximise returns.
Our Environmental, Social and Governance (ESG) Policy is consistent with our obligations under the Future Fund Act 2006, our investment mandates, investment beliefs, investment strategy and international best practice. We seek to provide a prudent and robust approach that is aligned to our overall objective.
We focus on those ESG factors that have the potential to materially impact the performance of our investment portfolio and/or our reputation. Relevant ESG factors vary by industry and across asset classes, but can include any of the following: occupational safety, human and labour rights, climate change, sustainable supply chain, corruption and bribery.
We focus on understanding the full spectrum of future risks and opportunities to which our portfolio is exposed, and invest accordingly.
Integrating ESG factors into investment decision making
In line with our ESG Policy we integrate ESG into the processes for considering investment proposals and investment manager appointments. This ‘integrated’ approach is, in our view, an important part of being an effective long-term investor.
As part of our manager selection and monitoring process, we consider the extent to which the manager is effectively managing the financial risks and opportunities that may arise from ESG issues.
We exercise the ownership rights associated with our investments according to our corporate governance voting principles, which are available in our ESG Policy.
Alongside the voting principles in our ESG policy, we periodically provide additional commentary and guidance on our approach to particular governance matters. See executive remuneration and COVID-19: considerations for ASX-listed companies.
We also engage with key investee entities, either directly or in partnership with our investment managers, to promote enhanced ESG performance and establish a climate of long term asset stewardship.
Each year we publish a detailed summary of the Future Fund Board of Guardians’ proxy voting for General Meetings of Australian listed entities:
Information about how we exercise our ownership rights in Australian and international listed equities is available in our annual report.
Our ESG Policy provides a framework which helps us to determine what entities and sectors are excluded from the investment portfolio for non-financial reasons.