Stewardship Report 2021 - Making a difference - Aware Super
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Making a difference Stewardship Report 2021
How we report “We’re one of Australia’s largest super
funds managing over $1481 billion
Inside this report
in savings for more than 1.1 million About us 2
This year we’ve introduced some improvements to our annual report to help our members, employers and other stakeholders
find the information they need more easily.
members. We’re committed to Advocacy and collaboration 3
helping our members achieve their Our commitment to the United Nations
best possible retirement and are the Sustainable Development Goals 5
Part of the Annual Report Additional super fund for any Australian who Active ownership 6
report values community.” Diversity 9
Deanne Stewart, CEO. Climate change 10
Modern slavery 12
Making a
difference
Making a
difference
Making a
difference
Making a difference
Governance
Making a difference
Destination
Net Zero Report
Cultural heritage 14
Annual Report Product Performance Product Performance Report 2021
2021 Report 2021 Report 2021
Aware Super VicSuper
Culture and conduct 15
1 As at 30 June 2021. Executive remuneration 16
Annual Report Aware Super VicSuper Governance Destination Net
2021 Product Performance Product Performance Report 2021 Zero Report
Report 2021 Report 2021
For more information or to request a printed copy free of charge, please call 1300 650 873 | aware.com.au
Responsible Investment Highlights
Important information and disclaimer:
Association Australasia
Prepared and issued by Aware Super Pty Ltd ABN 11 118 202 672, AFSL 293340, the trustee of Aware Super ABN 53 226 460 365. Unique Superannuation
• Recognised as one of the
Identifier (USI) 53 226 460 365 001, MySuper Authorisation Numbers 53 226 460 365 073 and 53 226 460 365 954. When members receive advice, they receive Recognised as a Responsible leading super funds for
it under our financial planning business, Aware Financial Services Australia Limited ABN 86 003 742 756 AFSL No. 238430. Aware Financial Services Australia Investment Leader 2021 by responsible investment by RIAA.
Limited (ABN 86 003 742 756, AFSL 238430) is wholly owned by Aware Super. We’ve been integrating ESG the Responsible Investment • Received the highest A+ rating
for over a decade, and we’re Association Australasia (RIAA).
Issued October 2021. from the PRI for Strategy &
recognised as a global leader
This acknowledges: Governance.
in responsible ownership having
achieved recognition through a • Recognised by the PRI as a
• our commitment to responsible leader for our approach to the
variety of awards, memberships,
investing; appointment, selection and
and invitations to participate in
global initiatives. • our explicit consideration monitoring of fund managers.
of environmental, social • Recognised by the PRI as a
and governance factors in leader for our Climate change
investment decision making; and reporting.
• our strong and collaborative • The only Australian super fund
stewardship; and to be awarded the global ESG
• our transparency in reporting Incorporation Initiative of the
activity, including the societal Year by PRI in 2019.
and environmental outcomes • One of only 30 global
being achieved. companies invited to join
the UN Global Investors for
In 2019 we were recognised Sustainable Development
We’d love to get your
by the PRI as a leader in our Alliance.
feedback on our report:
approach to the appointment,
• The first major Australian super
If you have any comments selection and monitoring of
fund to become Tobacco Free
about the content covered this fund managers and in 2021 we
in 2012.
report, please don’t hesitate to provided a case study to support
contact us: our leading approach. More information can be found in
our Responsible Investment Policy
Improving responsible investment and on our website:
through manager engagement |
corporate.responsibility Case studies | PRI (unpri.org) ware.com.au/
a
@aware.com.au responsible-ownership
We recently merged with VicSuper, so
nowAware
B we have
Super |the capacity
Stewardship for2021
Report even greater good! Aware Super | Stewardship Report 2021 1
About us Advocacy and
collaboration
We began putting members first in 1992 when we were known as First State Super. We engage and collaborate with other like-minded investors & industry associations
In 2020 we merged with VicSuper and WA Super, and became known as Aware Super. to help us understand the ESG opportunities across a range of industries and sectors.
One thing hasn’t changed though, our unwavering commitment to doing well for We’re involved in a number of initiatives including:
our members and at the same time as doing good for all.
Responsible ownership Stewardship Social The GISD Alliance is made up of 30 The Responsible Investment Association Aware Super has joined Climate League
CEOs all of whom are recognised Australasia (RIAA) champions 2030, established by the Investor
A key way we deliver on our We view stewardship as an important • Greater accountability for cultural leaders of major financial institutions responsible investing and a sustainable Group on Climate Change (IGCC), as a
commitment to doing well and doing element of our responsible ownership heritage management, at Rio Tinto, and corporations spanning all the financial system in Australia and New foundational supporter. This new ten-
good, is the approach we take to approach, and this is what this following Juukan Gorge destruction. regions of the world. GISD aims to: Zealand. RIAA is dedicated to ensuring year initiative aims to further support
investing our members’ money – Stewardship Report is about. • Greater accountability for conduct a) Generate support and adoption of capital is aligned with achieving a and act towards a goal of reducing
we call this responsible ownership. issues and governance at AMP. actions required to mobilise long-term healthy society, environment and Australia’s annual greenhouse gas
It means we are actively monitoring
• Greater focus on modern slavery finance and investment for sustainable economy. With over 350 members emissions by at least a further 230
When we invest our members’ money and engaging with the companies we
and labour rights through Investors development. b) Foster transformation managing more than $9 trillion in million tonnes on top of what is already
we are looking for strong risk adjusted invest in, and the fund managers we
against Slavery & Trafficking Asia- of the enabling environment for assets globally, RIAA is the largest and projected for the end of the decade.
returns to drive the best retirement partner with. This engagement helps
Pacific (IAST-APAC). long-term investment in sustainable most active network of people and
outcomes but we also actively consider influence positive improvement in areas Read more about IGCC:
development. c) Facilitate the alignment organisations engaged in responsible,
how a range of environmental, social such as climate change, worker safety, • Implementation of an external
of business operations, finance and ethical and impact investing across climateleague.org.au
and corporate governance (ESG) factors diversity, company conduct and culture, whistleblower line to support
investment with the 2030 Agenda for Australia and New Zealand.
impact our investments. When making and cultural heritage management. employees speaking up.
Sustainable Development.
investment decisions across all asset Additionally, we use our voting rights to • Commitment to diversity targets Read more about RIAA:
classes, we look at: ensure these companies are governed at the executive level through Read more about GISD:
in a way which both enhances their responsibleinvestment.org
• Environmental issues like climate 40:40 Vision. gisdalliance.org
performance over the longer term and
change, waste, pollution, and holds them accountable. Governance
biodiversity.
• Social issues like diversity & inclusion, Some of the important outcomes we’ve • Improved board skills, independence
modern slavery, labour relations helped achieve over the year are: and diversity.
including supply chain management, Environmental • Increased oversight of safety risks
workplace health & safety, conduct & during COVID-19.
culture and adherence to international • Linking climate related metrics to • Executive incentives aligned to
conventions. executive remuneration. shareholder and employee experience
• Governance issues like board • Net zero and more ambitious emission during the pandemic. Investors against Slavery & Trafficking 40:40 Vision is an investor-led We are a signatory to the Principles
structure, director remuneration, and reduction targets through our lead Asia-Pacific (IAST APAC) is an investor- initiative to achieve gender balance in for Responsible Investment (PRI). The
transparency & reporting. role within Climate Action 100+. led initiative that has been convened executive leadership across all ASX200 PRI is a universal framework to help
• Commitments to an advisory vote on to engage with companies in the APAC companies by 2030 and seeks to investors learn from each other and be
As a responsible owner, we work with fund
companies’ climate transition plans at region in which we collectively invest, move beyond tokenism to achieve this a collective voice on ESG issues. We
managers, boards and company executives
2022 Annual General Meetings. and promote effective action among through business-oriented structural participate in their annual benchmarking
to ensure they act in the interests of
them to find, fix and prevent modern change, encouraging companies to survey and have consistently received
members, which means ensuring they
slavery, labour exploitation and human set and publicly report on progress an A+ for our Responsible Investment
make decisions that consider ESG factors
trafficking. against targets for women in executive Strategy and Governance.
and support the long-term sustainability of
leadership. 40:40 stands for: 40%
returns to our members. Read more about IAST APAC: Read more about PRI:
women / 40% men / 20% any gender –
More information can be found in the iast.fastinitiative.org the composition we have for the Aware unpri.org
Responsible ownership section of our Super board.
annual report.
Read more about 40:40 Vision:
4040Vision
2 Aware Super | Stewardship Report 2021 Aware Super | Stewardship Report 2021 3
Advocacy and Our commitment to the
collaboration
(continued) United Nations Sustainable
Development Goals
Aware Super works with the investment community and investee companies on a range
of initiatives that advance the adoption, integration and reporting of the UN Sustainable
Development Goals (SDGs). One example of this is our involvement with the UN GISD.
We are a member of the Australian IGCC is an Australian and New We joined more than 600 global
Council of Superannuation Investors Zealand collaboration on the impact of investors with more than US$55 trillion
(ACSI) and a signatory to its Australian climate change on the financial value in assets under management to engage
Asset Owner Stewardship Code. We of investments. We are a signatory the world’s largest carbon emitting
have supported a range of submissions to the Global Investor Statement to companies to act on climate change We have highlighted three
ACSI made on behalf of its members. Governments on Climate Change. We through the Climate Action 100+ material SDGs that are aligned to
also supported a range of submissions initiative. our stewardship activities – these are: Achieve gender equality and
Read more about ACSI: Take urgent action to combat
that the Investor Group on Climate climate change and its impacts. empower all women and girls.
Change (IGCC) made on behalf of its Read more about Climate Action 100+:
acsi.org.au
members. climateaction100.org 13.2 Integrate climate change 5.5 Ensure women’s full and
measures into policies, effective participation and equal
Read more about IGCC: strategies and planning. opportunities for leadership at
igcc.org.au all levels of decision-making.
We support the work of the Australian We are a client of Federated Hermes We are a CDP signatory and a supporter
Sustainable Finance Initiative through EOS, who undertakes engagement with of their climate change research,
our involvement in working groups companies held in our international resources and tools.
focussed on mobilising capital to equities portfolio on our behalf. We
deliver on sustainability challenges and have supported a range of submissions The CDP is a global initiative aimed
opportunities. The initiative developed Federated Hermes EOS made on behalf at requiring the largest companies to
a roadmap to realign the finance sector of its members, including those focused disclose information on their greenhouse
to support greater social, environmental on climate change. gas emissions.
Promote sustained, inclusive and
and economic outcomes for Australia. Read more about CDP: The 17 SDGs contain 169 targets to address the world’s sustainable economic growth,
Read more about Hermes EOS:
most urgent sustainability challenges, such as poverty, full and productive employment
Read more about the Australian cdp.net/en
hermes-investment.com inequality and climate change, by 2030. It’s widely and decent work for all.
Sustainable Finance Initiative:
recognised that achieving meaningful progress by 2030
will require trillions of both public and private investment 8.7 Take immediate and
sustainablefinance.org.au
dollars. We’re proud that through the investments we effective measures to eradicate
make and our active ownership activities we will be forced labour, end modern
contributing to a number of the SDGs, fulfilling our slavery and human trafficking
commitment to delivering strong, long term returns and secure the prohibition
with societal and environmental benefits. and elimination of the worst
forms of child labour, including
Throughout this report we have included the SDG recruitment and use of child
icon that aligns to our active ownership themes. soldiers, and by 2025 end child
labour in all its forms.
4 Aware Super | Stewardship Report 2021 Aware Super | Stewardship Report 2021 5
Active
ownership
Our responsibility as an asset owner is to make sure companies we invest in are
governed and managed to enhance their long-term performance and to protect
our members retirement savings.
Engagement International
Our active ownership
approach includes: Companies engaged Issues and objectives engaged Issues and objectives engaged
We use our ownership rights to engage with companies, where we believe
By region By theme Environmental
the management of ESG issues is not meeting industry standards, community
expectations, or whose conduct threatens their reputation and value. The
Engagement
objective of engagement is to encourage the company to improve its ESG
policies and practices, thereby protecting or increasing its ability to deliver
When engaging on ESG matters our members with sustainable long-term returns.
we pay close attention to risks
and opportunities that can impact We engage directly with Australian companies, through our fund managers,
the long-term sustainability of partnering with ACSI and other collaborative groups (e.g. Climate Action
returns to members. 100+). When engaging with international listed companies, we partner
with Federated Hermes EOS and fund managers.
Australia & New Zealand 2 Environmental 24.0% Climate change 79.9%
Developed Asia 86 Social and ethical 21.1% Forestry and land use 5.1%
Voting shares Australia Emerging & developing markets 69 Governance 38.6% Pollution and waste management 9.7%
We engaged with 198 companies and over 419 meetings. Europe 177 Strategy, risk and Supply chain management 2.8%
We exercise our voting rights North America 277 communication 16.2% Water 2.6%
to express our views on good
United Kingdom 60
governance. We use our voting
Engagement objectives Issues and objectives engaged Total 671
rights to support resolutions that
By theme ESG
enhance value for our members.
Exclusions Issues and objectives engaged Issues and objectives engaged Issues and objectives engaged
Social and ethical Governance Strategy, risk and communication
Sometimes we exclude certain
companies or sectors if the
investment contravenes
international treaties or there is a Environment 14% Diversity 3%
risk of businesses being left with Social 28% Governance 20%
stranded assets. Governance 58% Cultural heritage 7%
Conduct & culture 4%
Social licence 0%
Labour rights & modern slavery 7% Bribery and corruption 2.4% Board diversity, skills Audit and accounting 6.8%
Safety 7% Conduct and culture 14.2% and experience 24.6% Business strategy 39.3%
Remuneration 24% Diversity 24.0% Board independence 14.5% Cyber security 3.2%
Climate risk 13% Human capital management 19.8% Executive remuneration 43.0% Integrated Reporting and
ESG reporting 12% Human rights 32.9% Shareholder protection other disclosure 24.1%
Capital raising 2% Labour rights 4.9% and rights 14.3% Risk management 26.6%
Plastic & circular economy 1% Tax 1.9% Succession planning 3.5%
6 Aware Super | Stewardship Report 2021 Aware Super | Stewardship Report 2021 7
Active Diversity Contributed
to SDGs
ownership
(continued)
Voting Exclusions We advocate for diversity among Australian boards and executive teams and are
concerned that companies who are not focused on diversity are missing out on
As a large investor we own shares in a diverse range of companies which “We don’t make decisions to divest fundamental opportunities for idea generation.
entitles us to vote on various matters. We use our voting rights to support from businesses or sectors lightly.
resolutions that seek to enhance value for our members across a range of We do it for our members and to A meaningful diversity strategy is
areas such as board accountability and structure, executive remuneration, be a true force for good in our critical for companies to create long-
human rights, diversity and climate related disclosure and action. Our community. We must respond to term value - making the most of all their
focus is, and will remain on, ensuring that the companies we invest in the risks posed by climate change people and attracting and retaining the
continue to deliver the best possible long-term returns for our members. and establish a clear roadmap for right skills and best minds, will likely
the future.” require a strong focus on building a
When voting on resolutions for Australian listed companies, we
diverse workforce. Australian companies
receive recommendations and advice from the Australian Council of Deanne Stewart, CEO
have been slow to respond and, as a
Superannuation Investors (ACSI) and, our engagement with companies and
result, fail to benefit from existing and
fund managers is considered in our voting decisions.
As part of our responsible ownership potential human capital. With workforce
When voting on resolutions for international listed companies, we receive approach we have an exclusion demographic shifts and technology
recommendations from CGI Glass Lewis and a number of our investment framework that guides our decision advances, diversity is quickly becoming
managers vote directly. making when investing in industries a driver of growth. Maximising the
or sectors that may not deliver strong potential of a diverse workforce is
long-term investment returns or create a not only a social imperative; it’s a
positive impact for our members and the competitive advantage.
We have seen an increase in the activities, diversity & inclusion, cultural
number of shareholder resolutions heritage and climate related activities. communities they live in.
Gender diversity in
relating to environmental and social We also supported resolutions asking
issues, for example climate change companies to undertake a racial equity Industries we don’t Australia
and human rights. We supported 75% audit, paying the living wage, forming invest in 2021 continues to see a record level
of these including proposals regarding a Human Rights Oversight Committee
1. Manufacturers of tobacco of female appointments to ASX200
companies reporting on their lobbying and reducing GHG emissions.
or cigarettes boards - 48% of the 73 new directors
announced are women. This means that
In 2012 we were one of the first super ASX200 boards are nearing 34% women,
Australian shares funds to divest of these companies, with the ASX300 not far behind at
Meetings 342 thereby setting an industry
precedent.
31.7%. We are committed to promoting
gender diversity and on this basis chose
1,815
not to support the re-election of existing
2. Thermal coal miners
Resolutions voted on directors at 12 different companies. Case study Case study
From 1 October 2020 we excluded
9% of votes were
thermal coal miners across our
As board gender diversity continues Gender equality Gender equality: Pfizer
Voting results against management to improve, focus has now turned to
entire investment portfolio. This is an 40:40 Vision: We have leveraged our We have engaged with the US
International shares gender balance at the executive level.
important first step in our ongoing long-term relationship with Origin pharmaceutical company Pfizer
We have joined the collaborative
3,137
response to climate change and Energy to set gender balance targets. regarding the low levels of gender
investor-led diversity initiative 40:40
Meetings prepares our investment portfolio to Origin already had targets around diversity on its board, arguing they
Vision, which encourages companies to
transition to a low-carbon future. senior female appointments (target should look beyond current or former
Resolutions voted on 34,714 3. Controversial weapons
set gender balance targets in executive
leadership by 2030.
50%) and retention levels (89%),
however following our engagement
CEOs and candidates with scientific
or technology expertise. We’re pleased
10% of votes were From 1 October 2020 we excluded they agreed to sign the 40:40 Vision to see the appointment in early 2020
Voting results against management controversial weapons. This pledge for gender equality targets at of two additional female directors with
includes any company involved in the executive level. backgrounds in science and education,
the manufacturing or production of and civil society.
4040Vision
chemical weapons, cluster munitions,
land mines and depleted uranium.
This means no new investments
in this sector across our entire
investment portfolio.
8 Aware Super | Stewardship Report 2021 Aware Super | Stewardship Report 2021 9
Climate Contributed
to SDGs
change
According to the Intergovernmental Panel on Climate Change (IPCC), it will take
significant effort to limit global warming to the Paris Agreement target of 1.5°C
above pre-industrial levels.
Unmitigated climate change would potential for reputation and litigation risk. had 116 engagement meetings with
have catastrophic impacts across the To mitigate the impact on our investment 30 companies to discuss their climate
globe, including impacts on human portfolios, and the financial system as transition strategy. The engagements
health, biodiversity, water availability, a whole, our engagement is focused on included:
and disruption of ecosystems. Climate ensuring the companies we invest in
• a deep dive into a company’s
change therefore presents a significant have strategies and actions aligned to
decarbonisation pathways, including
financial risk to the global economy and the Paris Agreement goals. This includes
encouraging setting of short, medium-
to our members retirement outcomes. advocating for the adoption of the TCFD
or long-term targets for net zero or
framework, a net zero commitment and
There are also physical risks associated other emissions reduction; and
with rising average global temperatures,
accompanying disclosure of pathways to Case study Case study Case study
achieve those aims. • strengthening climate governance,
rising sea levels and the increased including TCFD disclosure; and Climate Action 100+ Shareholder votes on Climate change transition
severity of extreme weather events Progress to date: • requesting the incorporation of We are a lead investor in Climate climate transition plans – We commissioned a report through
(regardless of whether the Paris targets
are met or not). A range of climate related priorities
climate-related key performance Action 100+. This global initiative is “Say on Climate” the Investor Group on Climate Change
metrics into a company’s senior supported by 600 investors with more (IGCC), which highlighted the important
have been incorporated into our In collaboration with ACSI, we engaged
Investors face transition risks and executive’s remuneration. than $55 trillion in assets collectively role of investors in the transition
company engagement strategy with with some of the highest emitters
opportunities as the economy adjusts the top 20 emitters (Scope 1 & 2) in under management – across 33 to net zero emissions. Empowering
in the Australian listed market to
to a lower carbon future. An inadequate our Australian listed equities portfolio markets. That’s more than half of all Communities: how investors can support
encourage them to commit to a
response to any of these risks raises the prioritised for action. In 2020-21 we managed assets in the world. While an equitable transition to net zero
voluntary advisory resolution at every
many companies have set long term details the opportunities and challenges
annual general meeting (AGM) on their
goals to reach net zero emissions, it’s for investors in helping ensure a just
climate transition plans, commonly
not as clear how they are going to meet transition for those communities that
referred to as the ‘Say on Climate’.
them. Further engagement is required are currently economically tied to
Emissions definitions – This allows investors to vote on a
with both boards and management fossil fuel industries. More information
put simply company’s Climate transition strategy
to discuss how they intend to achieve about this report can be found on the
at their AGM.
these goals and the interim emissions IGCC website.
Scope 1 emissions are direct reductions they will reach in the Outcomes: Woodside, Origin, Santos,
short-term. igcc.org.au
emissions from owned or Oil Search, Rio Tinto, AGL have publicly
controlled sources. announced that they will include a
Through our lead role within Climate
resolution regarding their climate
Scope 2 emissions are indirect Action 100+ we saw positive outcomes
transition plan at their 2022 AGM.
emissions from the generation of from the companies for which we are
purchased energy. the lead investor including: Following the company announcements,
multiple engagements have been set
Scope 3 emissions are all indirect • Updated climate transition strategies.
up to discuss the expectations from
emissions (not included in Scope • New more ambitious emission investors prior to the 2022 AGM. This
2) that occur in the value chain of reduction targets. includes articulating the company’s
the reporting company, including
• Emission reduction targets linked to climate strategy and progress against
both upstream and downstream
executive remuneration. it with clear and measurable milestones;
emissions.
While the new emission reduction setting more ambitious targets
targets are a step forward, we’ll continue incorporating their material Scope 3
our active engagement with boards and emissions.
management to highlight the need to
go further and incorporate the material
Scope 3 emissions. More information on
the update and progress report can be
found on the CA100+ website.
climateaction100.org/
10 Aware Super | Stewardship Report 2021 Aware Super | Stewardship Report 2021 11
Modern Contributed
to SDGs
slavery
There’s a strong relationship between economic,
social and environmental policies, full employment
and decent work for all.
STOCK STOCK
While some economies have enjoyed The core questions we ask when we
relatively strong economic growth, engage with companies on these
others have fallen behind with issues are:
unsustainable earnings and not all
workforces enjoying decent work. • Find it: ‘Have you found modern
More progress is needed. slavery in your operations or
supply chain?’ and ‘If not, can you
Business models and supply chains demonstrate that you have rigorous
that rely on modern slavery, labour processes in place to look for it?’
exploitation and human trafficking • Fix it: ‘If so, can you demonstrate
deliver unsustainable returns. the steps you have taken to improve
Since the introduction of the the lives of victims?’
Australian Modern Slavery Act 2018 • Prevent it: ‘Have you effectively
we have engaged with companies to reported your actions and the steps Case study Case study Case study
understand how they are managing taken to prevent a re-occurrence?’ US farming machinery Decent work Investors Against Slavery and Trafficking – Asia Pacific
the risk of modern slavery in their We’re also engaging with our direct manufacturer Since the initial peak of the pandemic IAST – APAC (Investors Against engagements with specific companies.
operations and supply chains. assets on their Modern Slavery
Additionally, through ACSI, we We engaged with one US farming and the subsequent global shutdowns Slavery and Trafficking – Asia Pacific) 23 companies were selected as
approach as well as our investment experienced, we’ve systematically was launched in 2020 as an investor engagement priorities from four sectors
commissioned research to analyse managers. We have asked the machinery manufacturer to learn how
the US sanctions had impacted them. engaged with companies on how they initiative to promote effective company – Consumer Discretionary, Consumer
the first reports made by Australian following of our investments:
Because their current human rights manage their human capital, with a action to find, fix and prevent modern Staples, Technology, and Healthcare.
companies under the new Act so we
• Are you required to report under the policy only applied to the supply chain, specific focus on health, safety and slavery, labour exploitation and human
could have a better understanding Work is now underway, including
we specifically asked how they would well-being. trafficking across the value chain. IAST
of where risks had been found, Australian Modern Slavery Act and establishment of engagement plans
comply and how it related to their APAC currently represents $A7.6 trillion
and to enable us to engage them what is your progress to date? For example, we’ve engaged with with specific objectives and milestone
customers and the use of its products. ($US5.7 trillion) in funds under
on the maturity of their reporting. • What is your approach to identifying Panasonic to understand its ‘e -Work’ targets and in some cases, engagement
The company said that it would comply management across 33 members in
More information on this research can modern slavery risks within your initiative and how it will continue to with the companies has started. Looking
but was still working through the issue June 2021.
be found on the ACSI website. business and supply chain? promote a flexible working culture ahead, investors will be using these
of how to conduct due diligence on their to support its employees. We‘ve also Aware Super is a founding member of plans for multi-year engagements
acsi.org.au • How would you respond if instances customers. engaged with Amazon to improve IAST-APAC and sits on the steering with the selected companies and will
of modern slavery were uncovered?
We followed up by sharing resources its health and safety performance, committee that oversees the initiative continue to share knowledge and
• Have any instances or risk areas especially in light of the pandemic and workstreams. best practice.
on how to approach human rights in
been uncovered? and the associated stresses placed on
high-risk areas, including sharing the UN Workstream 1 developed an investor IAST-APAC is strongly focused on
• If you manage an investment Guiding Principles reporting framework. employees. Additionally, we’ve engaged
with Walmart to encourage improved statement on modern slavery. industry collaboration including shared
portfolio, do you invest in high- We sought clarity on how the company This statement outlines investors’ knowledge and tools to address risk
risk geographies or industries (as would expand its human rights policy to communications on health and safety
practices between in-store sales expectations and encourages companies and takes inspiration from the investor
defined by Aware Super) and if so, include customers and product use, and to go over and beyond the legal initiative ‘Find it, Fix it, Prevent it’ in the
what is your process to understand how it would disassociate responsibly associates and the board.
requirements of the Australian Modern UK. It also engages with civil society,
the modern slavery risks of your from business relationships potentially Slavery Act (2018). It also suggests and including Walk Free and FAST, as well
investments? connected to an impacted region. encourages companies to take a number as investor briefings on specific risks by
of specific actions, based on best labour rights experts.
practice, to combat slavery effectively.
Many of the specific points raised
in the investor statement are linked
to workstream 2, which focuses on
12 Aware Super | Stewardship Report 2021 Aware Super | Stewardship Report 2021 13
Cultural Culture and
heritage conduct
“In 2020, many people in Australia and globally were shocked and saddened by We’re committed to enhancing the culture and conduct of the companies we invest in.
the destruction of significant sites in the Juukan Gorge in Western Australia and Corporate culture and conduct not only relate to the values and beliefs shared by those
the irreversible loss of First Nations’ cultural heritage…this event was not unique, in a company, they relate to the actual behaviours of the company and its employees.
nor the first of its kind”.
Excerpt from the Investor Expectations for Engagement with First Peoples: Consultation Paper
As part of our ongoing engagement managed through principled and Positive culture and conduct can
program, Aware Super is a member constructive engagement between have a huge impact on the long-
of the Rights and Cultural Heritage companies and First Peoples. term success of a company, including
Risk Management Working Group, an better performance, reputation and
ACSI and investor collaborative effort, More information on how we are productivity. On the other hand, poor
convened to better understand the meeting the objectives of our Reflect culture and conduct has the opposite
financial risks inherent in poor company Reconciliation Action Plan (RAP) effect. Over the last few years we’ve
engagement with First Peoples, and including annual reporting on how seen an erosion of public trust and
to chart a path towards improved risk we engage with companies on issues confidence in corporate Australia,
management. The Working Group aims related to Aboriginal land rights and coming at a significant cost to those
to see the risks of harm to cultural cultural heritage can be found in the involved – to both reputation and
heritage effectively mitigated and Responsible ownership section of our financial performance.
annual report.
Using our size and scale
for positive impact
As one of Australia’s largest super
funds, we use our scale and influence
to ensure better outcomes for members
now and in the future and to make a
real difference. That’s why we’re focused
on using our investment power for
good, monitoring and engaging with
the companies we invest in to ensure a
higher standard of culture and conduct. Case study
We actively engage with companies to
Cleanaway
ensure management supports positive Our investment in Cleanaway was While this gave us some confidence
culture and using our voting rights and only established after multiple in the Board’s commitment to cultural
monitoring key metrics such as safety, engagements with the Chairman over improvement, the eventual change
employee engagement, turnover and the initiatives put in place following the in CEO was seen as a positive.
consequence management across misconduct of the CEO. We increased We’re continuing to engage with the
different areas of the business. our holding only after we had Chairman to ensure the new CEO
confidence in the cultural initiatives put has the leadership skills necessary to
in place by the board. This included: support a positive cultural improvement.
• the inclusion of culture related We’ve seen a slight improvement in
metrics in the CEO’s remuneration; their latest employee engagement
and survey and importantly have seen an
• increased transparency and improvement in the share price, resulting
monitoring of employee engagement. in a strong return for our members.
14 Aware Super | Stewardship Report 2021 Aware Super | Stewardship Report 2021 15
Executive Recognition
and awards
remuneration
Executive remuneration is key to aligning management with company strategy Money Magazine
and performance.
Remuneration practices can provide voting against 40 (out of a possible Although we saw poor remuneration
significant insight into a company’s 286). 21 companies received a strike outcomes in some companies, our
culture, performance and strategy. and notably one company saw a board engagement proved to be beneficial and
Well-structured remuneration practices spill following their second strike. This led to improvements ahead of several
can support the long-term success of was the first spill seen in an ASX200 AGMs, including: Responsible Investment Association Australia
a company. Conversely, excessive pay, company since the two-strike legislation
persistently high bonus outcomes and was enacted. • one company cancelling increases in
lack of alignment with shareholders can fixed pay with amended long-term
adversely affect a company’s licence COVID-19: Most companies appear to incentives; and
to operate. This in turn may negatively be using common sense and cancelling • a CEO waiving his long-term incentive
affect the value of our members’ short-term incentives to ensure grant for 2020-21 and his deferred
investments. executive outcomes align with investor, short term incentive share rights for
worker and community experience. 2019-2020; and Workplace Gender Equality Agency
Throughout the year we saw continued However, there were several examples
scrutiny of corporate Australia’s of companies that lowered hurdles • another company publicly announcing
internal cultures with boards being held to enable executive bonus payouts it had revised upwards the earnings
accountable for underperformance. This or received government support and/ per share (EPS) base for performance
resulted in an increase in the number or rent relief. It was on this basis hurdles.
of strikes against Australian company that we did not support a number of
remuneration reports with Aware Super remuneration proposals.
16 Aware Super | Stewardship Report 2021 Aware Super | Stewardship Report 2021 17Contact us Phone 1300 650 873 Fax 1300 722 072 Email enquiries@aware.com.au Web aware.com.au Post PO Box 1229, Wollongong NSW 2500
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