Investing responsibly

Our portfolio wide investment exclusions

Investment Exclusions

Our approach to responsible investment primarily centres around ESG integration, investment stewardship and advocacy. However, in limited circumstances, we also apply investment exclusions, which we set out below.

For Australian or International listed shares, when Cbus Super itself (either through its internal or external investment managers) invests directly in those shares, we exclude direct investments in the following (subject to the exceptions set out further below):

• (Controversial Weapons) companies which have direct involvement in:
  • the manufacturing of controversial weapons (specifically, cluster munitions, biological and chemical weapons, anti-personnel mines, depleted uranium, and white phosphorus weapons); or  
  • the manufacturing of components or services of the above core weapon systems where those components or services are considered essential for the lethal use of the weapon; 

• (Tobacco) companies that earn 5% or more of their revenue⁵ from:
  • the manufacturing and/or production of tobacco products; or
  • the supply of tobacco-related products and services which includes electronic nicotine delivery systems, non-nicotine vaping products and e-liquids (excluding distribution and/or retail)⁶.

These bracketed terms are known as the Investment Exclusions.
 

⁵ Our third-party provider considers ‘revenue’ as being net revenues/external revenues/net sales/external sales (depending on how the companies report revenues), and does not include intersegmental revenue.

⁶ This expansion to the Tobacco exclusion was introduced in July 2024, and managers have been instructed to exit any existing holdings in companies appearing on the annual list provided by our third-party provider.

For the purposes of the Investment Exclusions, direct investment means investment in Australian or International listed shares whereby Cbus Super or its custodian (on behalf of Cbus Super) directly owns the relevant shares (and as a result, we can directly control what shares are and are not held).

For all other investments (including in the case of indirectly held Australian or International shares), we seek to apply equivalent investment exclusions where possible or relevant. This depends on the nature of the investment or the investment structure, for example:

• Investments made by investment vehicles where the investment decision making sits with a non-Cbus Super entity (such as unit trusts, funds of funds, or other pooled vehicles);
• Where Cbus Super does not directly own the underlying assets; and
• Other indirect equity and debt investments, for example through exchange traded funds (ETFs) or derivatives.

How we apply the Investment Exclusions

We obtain a list of companies to which the Investment Exclusions apply through a third-party provider⁷. This list of excluded companies is reviewed and updated annually, and then provided to our internal and external investment managers who invest directly in Australian or International listed shares for Cbus Super, who must then:

• Exclude new and existing direct investments in the shares in those companies; and/or
• Provide investment instructions to external investment managers which are subject to that list (for example, in the case of transition or non-discretionary investment managers).

We rely on the data provided by the third-party provider to implement the Investment Exclusions. Implementation may be affected by the accessibility and accuracy of that data, or any potential error by the third-party provider or investment manager, or operational errors caused by their respective systems or controls.

⁷ We currently use third-party provider, Morningstar Inc. Sustainalytics®, for identification of relevant listed companies.

Exceptions to the Investment Exclusions

There may be circumstances which result in holdings in companies which are subject to the Investment Exclusions. This may occur, for example:

• Where a merger with another fund in the future results in the acquisition of, or exposure to, holdings covered by the Investment Exclusions; or
• Where there is exposure to a newly listed company or an existing company’s revenue exposure exceeds the exclusion threshold outside of the annual review cycle undertaken by our third-party provider.

Where we have holdings in excluded companies, we will seek to exit these holdings if possible and in a manner consistent with members’ best financial interests, taking into account matters such as alternative available options, liquidity, market conditions and investment fund structure.

Tobacco free finance signatory.

Cbus Super is a signatory of the Tobacco-Free Finance Pledge.

We have identified several key areas of focus: Climate Change, Investing in the Real Economy, Nature & Biodiversity Loss, Modern Slavery and Workplace Health and Safety. These priorities generally represent a financial risk to our portfolio, are the subject of regulation, or are closely linked to our members and the industries in which they work. 

Climate change

We believe that climate change is one of the most significant challenges we face as a society today, and that tackling climate change needs to be done in partnership with a focus on real world outcomes. Climate change creates both risks and opportunities that we need to assess and understand to achieve the best financial outcomes for our members. We also need to consider how the balance of risks and opportunities may change depending on how the world responds to climate change, and how successful we are at limiting global warming.  

We have developed a Climate Change Position Statement (PDF), that clearly articulates our view that a net zero transition is the best outcome for our members. This position underpins our policy advocacy work within the climate space. We have also developed a set of Climate Change Principles, which capture our beliefs across a number of key areas and are aimed at supporting our ability to manage climate change risks and opportunities, and meet our climate change goals.  

We have the following set of public goals that aim to support the transition of our global economy to a low carbon future and limit global warming: 
 

• Net zero emissions by 2050^*
• Contribute to a 45% reduction in real world emissions by 2030^*
• Allocate capital to climate change investments 
• Engage with our priority list of Australian listed equity companies.

^* These goals currently cover over 70% of our portfolio and work continues to expand our coverage to include additional asset classes. Cash and sovereign bonds are excluded from these targets.

Find out more detailed information about our climate change goals.

Our progress towards our climate change goals

Each year we disclose our climate change activities and the progress we have made towards meeting our climate goals under the Task Force for Climate-related Financial Disclosures in our Responsible Investment Supplement (PDF).

Investing in the real economy

We are committed to investing in projects and businesses that are important to our members, will make a difference in the real world, and are aligned with our members’ best financial interests.  

Cbus Property

With a long history in the building and construction industry and through our wholly owned entity Cbus Property³, we own one of the most sustainable commercial property portfolios in the country as rated by NABERS.⁴

In aligning with our members’ interests, embedding strong ESG practices in the built environment, including the development of sustainable building and construction practices, can generate long-term, sustainable value and positively impact our members’ quality of life in retirement.

In addition, Cbus Property's office portfolio achieved net zero carbon status in 2022, eight years ahead of their 2030 target, as certified by the Climate Active Carbon Neutral Building Standard; and they again received global recognition in the annual Global Real Estate Sustainability Benchmark (GRESB) Real Estate Assessment.

³ Cbus Property Pty Ltd is a wholly-owned entity of Cbus Super and is responsible for the development and management of a portfolio of Cbus Super’s property investments.

⁴ Cbus Property has been recognised as an industry leader in the  2024 NABERS Sustainable Portfolios Index, which calculates a NABERS Portfolio rating for Cbus Property’s office portfolio. More details are available here Cbus Property Sustainability.

Investing in renewable infrastructure

We have invested in several wind and solar energy opportunities in Australia and overseas and we are working with governments and our industry partners to identify further opportunities to invest in Australia’s energy transition. Examples include our investments in Star of the South, Australia’s most advanced offshore wind project. 

Social and affordable housing

We have a long history in advocating for and investing in social and affordable housing. We’re currently one of the largest individual supporters of Housing Australia’s bond issuances. These investments not only support new home developments for vulnerable Australians, they support the economy through job creation and deliver strong risk-adjusted returns for our members. 

Nature and Biodiversity Loss

We believe that nature and biodiversity loss present significant financial risks to our portfolio, our economy and society. The issue is also closely connected to climate change, meaning that efforts to protect and restore nature and biodiversity can help us address this other substantial source of risk.

Modern Slavery

We report against the Modern Slavery Act, which aims to increase business awareness of the risks of modern slavery in the production and supply chains of Australian goods and services, and work to minimise the risk of modern slavery in our operations and supply chains. This includes engaging with and alongside likeminded investors and companies about modern slavery risk management.   You can view our most recent Modern Slavery Statement (PDF). 

Workplace Health and Safety

Safety disclosures and practices provide insights into a company’s operational performance and culture. Serious safety incidents have a significant personal cost to employees and their families and financial costs to employers. They can impact productivity and performance and expose the company to compensation, litigation, and reputational damage.  Safety considerations form part of the due diligence process for relevant assets, risk committee reporting, and our engagement with companies, which helps inform our voting.

Sustainable Development Goals (SDGs)

Each year we indirectly contribute to a range of SDGs through acting in our members’ best financial interests. Our contributions are made through our commitment to our members and the industries they work in, being an employer of choice, through our investments, and engaging and advocating across our portfolio-wide ESG priorities.

The SDGs where we believe can contribute are:

Transparency

We measure our activities and report on our progress, so our members can be confident that we do what we say we do. 

You can read more about our responsible investment activities and outcomes in: 
 

• Cbus Super Annual Integrated Report 2024 (PDF) 
• Responsible Investment Supplement 2024 (PDF) which has been independently reviewed and verified through an external limited assurance process. 
• Our 2023 PRI Transparency report (PDF), and our 2023 PRI Assessment report (PDF). Cbus Super is a PRI Signatory and for 2023, Cbus Super’s transparency and assessment results showed we were above the median for all nine PRI modules against our global asset owner peers with Funds Under Management (FUM) of between A$50b to A$250b.