Responsible Investment at Rest

Responsible investment can help our members grow their super while contributing to a more sustainable future.

ESG factors are considered across all investment decisions, and we also offer a Sustainable Growth option, with enhanced responsible investment criteria.

We're a Responsible Investment Leader

Rest has been recognised as a Responsible Investment Leader by the Responsible Investment Association Australia (RIAA) in its 21st Responsible Investment Benchmark Report 2022. This landmark study reveals the trends of how responsible investment is practiced by funds. It also highlights how change in the attitudes of organisations around responsible investment is influenced by shifting member expectations, strong financial performance and the increasing importance of social, environmental and governance factors.

For more information on our responsible investment approach, please read our Sustainability, Responsible Investment and Climate Change Supplement.

Integrating ESG into our investment decisions

We take important steps to make sure ESG factors are considered across our investment decisions. Please refer to the Investment Guide for more details of the ESG factors we considered in the investment process. This includes both the assets we invest in and the investment managers we work with.

When we research, select, appoint and monitor investment managers, we look at how well they’ve embedded ESG considerations into their processes. We also consider how they manage existing and evolving ESG factors like climate change and workforce issues (eg carbon footprint, exposure to stranded assets, fair pay, and gender equality).

Funds we invest in

Our property investments in the GPT and QIC funds are great examples of ESG integration in action. Both funds have committed to achieving net zero carbon emissions.

The GPT Wholesale Office Fund which achieved carbon net zero for its operations at the end of 2020.

GPT

Rest is invested in the GPT Wholesale Office Fund (GWOF), which owns 18 buildings in Sydney, Melbourne and Brisbane. In December 2020, the GPT Wholesale Office Fund exceeded its carbon neutral commitment made as a signatory to the World Green Building Council Net Zero Carbon Buildings Commitment in September 2018.

Investing in building efficiency has long been a focus; since 2005, the GWOF has more than halved the energy intensity of its assets. All electricity is sourced from renewables through on-site generation and off-site procurement. The remaining emissions are controlled or eliminated through investment in carbon offset projects.

QIC

Rest is an investor in the QIC Shopping Centre Fund (QSCF), which includes investments in shopping centres across the Australian Capital Territory, New South Wales, Queensland, Victoria and Western Australia. In June 2020, QIC announced their commitment to achieving net zero carbon emissions for core Australian retail assets by 2028 (including the assets in QSCF).

This will be achieved by delivering a range of carbon-reducing initiatives, including one of Australia’s largest rooftop solar projects, the reduction of energy consumption and by making smart investments in current and emerging technologies.

A spotlight on climate change

We recognise that a company’s approach to climate change has the potential to influence long-term investment performance – and the value of your retirement savings.

Our responsible investment approach encourages investment managers and the companies we invest in to consider both the financial risks and opportunities related to climate change.

Advocating for positive change

Our industry collaborations help promote good ESG practices by increasing awareness and education on ESG issues. They also help us engage with companies and government to positively influence ESG performance and policy.

The PRI¹ works to understand the investment implications of ESG factors and helps investors incorporate them into investment and ownership decisions.

Our membership with ACSI helps Rest manage ESG issues to protect our members’ investments. We sit on both the ACSI Board and the Member Council.

The Investor Group on Climate Change (IGCC²) supports investment beneficiaries by encouraging government policies and investment practices that address the risks and opportunities of climate change. Rest is represented on the Transparency & Thought Leadership, Physical Risk & Resilience and Policy and Advocacy working groups.

RIAA provides a strong voice on ESG issues for members and is dedicated to ensuring capital is aligned with achieving a healthy society, environment and economy. Rest is represented on the RIAA First Nations Peoples’ Rights, Human Rights, and Nature working groups.

Rest is a collaborator in the Australian Sustainable Finance Initiative (ASFI). ASFI has brought together over 130 individuals from more than 80 organisations across all parts of financial services (as well as academia, civil society and government) to create a sustainable finance roadmap for Australia.

The Global Real Estate Sustainability Benchmark (GRESB³) is the leading ESG benchmark for real estate and infrastructure investments across the world. Rest uses GRESB data and analytical tools to manage ESG risks, capitalise on opportunities and engage with investment managers.

We are a member of the FAIRR Initiative's investor network, helping to build a more sustainable food system by raising awareness of the material risks and opportunities present in global protein supply chains.

Climate Action 100+ is an investor-led initiative involving 700 investors, responsible for over $68 trillion in assets under management, engaging the world's largest greenhouse gas emitting companies on improving climate change governance, cutting emissions and strengthening climate-related financial disclosures.

1. Principles for Responsible Investment is a registered trademark of the PRI Association.
2. Investor Group On Climate Change is a registered trademark of Investor Group on Climate Change Australia/ New Zealand Inc.
3. GRESB® is a trademark owned by GRESB BV. All trademarks used in this document are used with the relevant trademark owners consent.

Contributing to a sustainable future

Negative Screening

We use negative screening to exclude certain industry sectors or companies from your investment portfolio (however, exclusions do not apply to indexed investment options⁴). The negative screening we currently apply to our investments include:

4. Rest’s indexed investment options are Australian Shares – Indexed, Overseas Shares – Indexed and Balanced – Indexed.

Tobacco Manufacturers

Investing in companies directly involved in tobacco manufacture presents both investment and reputational risk.

We also found from International Labour Organisation research, that child labour is rampant in tobacco growing communities⁵. So we made the decision to screen out manufacturers of tobacco and nicotine alternatives (e.g. vaping devices and e-cigarettes).

5. ‘Why sign the pledge?’, accessed 1 October 2020, from UNEPFI, https://www.unepfi.org/psi/tobacco-free-finance-pledge/

Controversial Weapons

We also made the decision to screen out companies directly involved in the production of controversial weapons.

While there is no official global definition of controversial weapons, for Rest, it includes:

cluster bombs
landmines
chemical and biological weapons
depleted uranium weapons.

Thermal Coal Mining - Listed Companies

Rest will not invest in or hold shares in listed companies that derive 10% or more of total annual revenues from thermal coal mining unless the company has a credible net zero by 2050 target or is signed up to the science-based targets^₆.

6. Organisations setting greenhouse gas emissions reduction targets grounded in climate science assessed by the Science Based Targets initiative (SBTi).

Sustainability themed investments

Our sustainability themed investments can combine strong long-term returns for our members with specific ESG outcomes (ie. through the use of renewables or the reduction of emissions).

Providing clean energy for Western Australians

Rest fully owns Collgar Wind Farm, a renewable power project at Merredin in Western Australia’s (WA) central wheatbelt.

Find out more

Using technology to lower carbon emissions

In 2019, Rest acquired an interest in Long Beach Container Terminal (LBCT), alongside Macquarie Infrastructure Partners.

LBCT, located in Long Beach, California, is one of the greenest port terminals in the world. They use electricity to power their major plant, including the cranes which lift the containers to and from the ships, the guided vehicles which transport the containers around the terminal, and the large auto stacking cranes which load/unload containers from trucking companies.

Traditionally this equipment has been powered by diesel fuel, which emits diesel particles into the atmosphere. By converting major plants to electric power, LBCT avoids these emissions.

Find out more

Actively managing our investments

There are two ways we can influence the companies we invest in on ESG matters – through engagement and share voting.

Engagement

The way we engage with the companies we invest in can be different depending on the type of asset.

For all listed equities, engagement is done via our investment managers. For Australian equities, we engage through a dedicated ESG service provider, the Australian Council of Superannuation Investors (ACSI). Rest is also a collaborator in meetings ASCI arranges with investee companies. Over the course of 2019, ACSI engaged Australian companies on issues that included:

climate change
corporate governance e.g. culture, conduct and accountability
board diversity e.g. gender diversity
workforce e.g. wage underpayments and modern slavery

You can find more information about ACSI’s engagement activities on their Engagement Reports page.

Share voting

Rest recognises its responsibilities of being a universal owner, which includes communicating members' long-term investment interests to companies and investment managers in which the fund invests. Consistent with our members’ best financial interests, our voting activities aim to protect and enhance sustainable, long-term value creation of our members' equity holdings.

Rest has ultimate responsibility for its voting decisions. Rest takes an active approach to voting Australian shares companies. Rest's Overseas shares are generally voted by investment managers, although Rest retains the right to instruct its investment managers on voting decisions.

Some examples of the ESG issues we or investment managers vote on include:

director elections
remuneration
placements
auditor appointments
shareholder resolutions (i.e. those submitted by shareholders rather than being proposed by management).

For more information on our approach to voting (including restrictions on voting), please read our Responsible Investment Policy.

You can also see a summary of our voting decisions in relation to listed shares in our Rest Proxy voting behaviours report.

Sharing our progress

As a member of the Principles for Responsible Investment (PRI), we are strengthening our efforts to measure, monitor and report on responsible investment. This includes climate-related risks and opportunities.

For more information, please refer to our PRI Transparency Report and PRI Assessment Report for the period ending 31 December 2020, reported in September 2022.

We also support a number of UN Sustainable Development Goals (SDGs) through our property and infrastructure investments, proxy voting activities and our screens and exclusions, including in relation to tobacco manufacture and controversial weapons.

We continue to look for more ways to contribute to the SDGs through our investments, and play a role in creating a better, more sustainable future for everyone.

For more information on Rest’s progress on SDG outcomes please see our Sustainability, Responsible Investment and Climate Change Supplement.