Retail Employees Superannuation Pty Limited ('the Trustee') is the trustee of the Retail Employees Superannuation Trust ('Rest' or 'the Fund').
The purpose of this document is to set out the policy adopted by the Trustee in relation to the exercise of voting and proxy rights with respect to the Fund's investments.
The Trustee is required by law to act in the best interests of Rest members when exercising its duties and powers. More specifically, the Trustee has a responsibility to act in members’ best interests as a whole, and must not favour the interest of one group of members over another. In addition, the Trustee has a duty to promote the financial interests of Rest members who are invested in the MySuper investment option.
Given the diverse membership of Rest and the Trustee's duty to act impartially between different groups of members, the Trustee believes that its duty requires it to focus on growing the retirement savings of its members. Therefore, the guiding principle of this Policy is that voting rights should be exercised and proxy votes should be cast in a manner that seeks to improve the long term investment performance of the Fund.
The Trustee recognises the potential impact of ‘sustainability’ factors on the long-term performance of the Fund’s investments, such as (but not limited to) environmental, social, governance or ethical considerations, possible future advancements in technology or changes to legislation, and other factors which are intrinsic to the financial structure of an investment (such as leverage and refinancing risk).
The Trustee has adopted a Sustainability Policy, which recognises that sustainability issues and risks may have a material influence on the investment returns of Rest’s investments over the long term. As a result, the Trustee will adopt strategies and appoint investment managers that are considered to be consistent with the Trustee’s objectives as a long-term investor on behalf of its members.
This Voting and Proxy Policy has been developed to ensure consistency with the Sustainability Policy and to ensure that sustainability issues are considered when exercising voting rights and corporate actions in the context of its impact on the long-term investment performance of Rest.
The role of Rest's investment managers
The Fund's investments are managed by selected external investment managers as well as the Fund's wholly owned subsidiary, Super Investment Management Pty Limited ('SIM'), who are appointed by the Trustee to manage the Fund's investments on behalf of the Fund in accordance with agreed guidelines (e.g. investment mandate agreements or investment product documentation).
Investment managers are expected to exercise all corporate actions and voting rights unless the Trustee makes a direction, in which case, the investment manager must exercise the corporate action or voting right in accordance with the Trustee’s direction. The Trustee maintains the ability to direct investment managers in relation to the exercise of proxy voting and corporate actions but will only do so where it is deemed to be in the best interest of Rest’s members.
When an investment manager is initially employed, the Trustee undertakes an extensive due diligence program in conjunction with its investment adviser in regard to understanding how sustainability measures are embedded within the investment process. Furthermore, the Trustee continuously engages its incumbent investment managers, its investment adviser, other super funds and industry bodies to ensure sustainability issues are adequately catered for within Rest’s investment strategy.
Fundamentally, “sustainability” is a strategic risk management issue. In this sense, investment managers that successfully identify sustainability factors and how such factors impact the investment returns of a given investment are best placed to contribute to the attainment of the Fund’s stated investment objectives.
Process for exercising voting rights and casting proxy votes
In managing the assets of Rest, the external investment managers that have been appointed to manage the Australian and overseas equities portfolios of the Fund are authorised to exercise any voting rights in respect of the Fund's investments. Where, in the manager’s view, the issue on which the manager is voting may potentially have an impact on future shareholder returns, the manager is required to exercise the voting right in a manner that is consistent with the best interests of Rest members.
While the Trustee reserves the right to direct an investment manager in relation to how to vote in respect of a particular voting right, the Trustee will only exercise this right with regards to Australian domiciled retail stocks or retail stocks where the company is operating in Australia, if the matter has been expressly considered and resolved by the Board. This policy of requiring express consideration and direction by the Board if the right to direct is exercised by the Trustee, has been adopted having regard to the whole of the circumstances of the Fund and is designed to support the prudential management of the Fund’s investment strategy and manage the risk of conflicts arising amongst the directors of the Trustee, given that a majority of directors of the Trustee are nominated by parties directly involved in the retail industry in Australia. Any resolution by the Board will take into account whether any director has a conflict in the particular circumstances and, if so, the consequences of the conflict. For this reason, the internal investment manager (SIM) that has been appointed to manage a portion of the Australian equity portfolio of the Fund will not exercise any voting rights with regard to Australian domiciled retail stocks or retail stocks where the company is operating in Australia unless the Board has expressly considered and resolved to direct SIM to do so. For similar reasons, the Trustee has a policy of ordinarily not directly owning shopping centre properties in Australia.
The Trustee’s approach involves the selection of active investment managers who have different investment styles and philosophies. The Trustee employs multiple investment managers because it believes in the benefits of diversification and we expect that from time to time managers will have differing views. It is therefore expected that there will be occasions when managers will have differing views with regards to the exercise of votes. It should be noted that historically, there has been a high degree of uniformity in the actions taken.
Process for monitoring and reporting on investment manager voting decisions
The Trustee requires all of the Fund's investment managers to report to the Fund on a monthly basis in relation to its voting activity.
Instances of votes ‘against’ management, ‘abstained’ votes and votes not cast, together with an explanation are then reported to the Fund’s Investment Committee on a semi-annual basis.
Annually, the Trustee will request the following from investment managers:
- a copy of their current proxy voting policy and any guidelines in relation to corporate actions;
- a copy of their current policies with respect to embedding “sustainability” into the investment process; and
- a report on current sustainability issues being considered.
The Trustee may also, from time to time, request investment managers provide a report on how votes have been exercised in relation to a specific matter. Where appropriate, Rest Investment Team will report findings to the Rest Investment Committee.
The Trustee will publish on its website a summary of the Fund's proxy voting record in respect of the Fund's investments, as required by relevant law.
The Trustee does not comment on the individual voting actions of its appointed investment managers.
The Trustee will undertake a formal review of this policy at least annually and more frequently where required to take into account new and/or changing legislative, regulatory or other relevant requirements.