Our Sustainable Balanced option
We offer a Sustainable Balanced option for those members who want a diversified portfolio whose external investment managers within the Australian and overseas listed shares asset classes aim to exclude investments in certain listed companies (through negative screening), and also consider positive environmental and social themes when selecting certain investments, as described below.
You can choose to invest all or part of your super into our Sustainable Balanced option (SBO). Similar to our other pre-mixed investment options, the SBO invests across a variety of asset classes and integrates financially material environmental, social and governance (ESG) factors into the investment decision-making process in line with our Responsible Investing approach1. It maintains a similar strategic asset allocation to growth and defensive assets as the Balanced option.
In addition, the SBO’s main point of difference (compared with our other pre-mixed options) is that its Australian and overseas listed shares asset classes have a more explicit focus on environmental and social matters. This is targeted through applying negative screening criteria (to aim to exclude investments in certain listed companies, where their involvement in, or revenue from, certain business activities meets specific thresholds for exclusion) and our external investment managers considering positive environmental and social themes when selecting certain investments, as described below.
Each external investment manager within the Australian and overseas listed shares asset classes applies its unique strategies and expertise when choosing listed shares for its portfolio within the SBO. External investment managers integrate ESG factors into their investment decision-making using their own processes and objectives – ultimately supporting CareSuper’s approach to responsible investing.
Approach to investments in pooled funds
When the SBO invests with an external investment manager within the Australian and overseas listed shares asset classes through a separate mandate, we ensure the relevant agreement articulates the investment exclusions that the manager is required to apply, based on our negative screening criteria. However, when the SBO invests in a pooled fund managed by an external investment manager, there is no separate mandate through which we can require that manager to exclude certain investments based on our negative screening criteria. When the SBO invests in a pooled fund, we advise the external investment manager of our negative screening criteria.
In the event that an external investment manager of a pooled fund invests in a listed company and that investment does not meet our negative screening criteria, we require the external investment manager to inform us of the purchase and provide an explanation for it. CareSuper will then decide whether or not to divest the holding in the pooled fund, based on what we consider to be in members’ best financial interests.
Approach to derivatives
CareSuper may invest in derivatives (such as futures and swaps) where we believe that the use of derivatives is in members' best financial interests. Derivatives are financial contracts, set between two or more parties, that derive their value from an underlying asset (which may include company shares). CareSuper does not apply negative screens to derivatives.
Listed share negative screening criteria
Within its Australian and overseas listed shares asset classes, the SBO aims, through the application of negative screening criteria, to exclude investments in certain listed companies where their involvement in, or revenue from, certain business activities meets specific thresholds for exclusion. However, for clarity, investments are permitted in companies whose involvement in or revenue from these business activities does not meet the relevant threshold for exclusion. Additionally, CareSuper's negative screening criteria are not applied to investments in a pooled fund or to derivatives, as described above.
The CareSuper investment team creates a list of companies that meet the threshold for exclusion under our negative screening criteria ("excluded companies list"), and updates it every six months, as described in the explanatory notes below. Following these updates, we inform our external investment managers within the Australian and overseas listed shares asset classes which listed shares are required to be excluded from new and existing investments in listed companies. The SBO’s listed shares investments are periodically monitored by our custodian to seek to ensure holdings in companies meet our negative screening criteria. As noted above, CareSuper's negative screening criteria are not applied to investments in a pooled fund or to derivatives.
However, circumstances may arise from time to time which result in a holding in a company not meeting our negative screening criteria (for example, if a company’s business activities change over time, in between the six-monthly points of time at which our excluded companies list is updated, or due to data accessibility or accuracy issues or external service provider errors as described in the explanatory notes below). We require all of the SBO’s external investment managers within the Australian and overseas listed shares asset classes to notify us if they become aware that their portfolio holds investments in listed companies that do not meet our negative screening criteria, based on our excluded companies list. If this occurs, we require our external investment managers to divest the relevant listed shares from the SBO as soon as practicable after the identifying the issue (typically within three weeks, considering liquidity constraints).
With the oversight of our internal ESG team, we aim to ensure that the SBO’s investment portfolio aligns with our approach to responsible investing and achieves its financial performance objectives for our members.
CHOOSING THE RIGHT INVESTMENT OPTION FOR YOU
It’s important to make sure the Sustainable Balanced option is right for you before investing in this option. Consider the following questions first.
- Do you want negative screening criteria to be applied by external investment managers for the Australian and overseas listed shares asset classes, and for the portfolio to have a more explicit focus on positive environmental and social themes compared with our other pre-mixed options?
- The Sustainable Balanced option uses negative screening criteria to aim to exclude investments in certain listed companies from the portfolio (where their involvement in, or revenue from, certain business activities meets specific thresholds for exclusion). The negative screening criteria are not applied to investments in pooled funds or to derivatives. Are you comfortable that it may behave differently to the broader market at times?
- Have you read all the relevant information about the SBO in the Product Disclosure Statements, including the option’s costs, risks and potential returns? Are you happy what you’ve learned suits your investing and personal goals?
If you’re still weighing up your choice, why not ask us for help? Access to financial advice on investment choice is part of your membership. Find out more.