Blog Posts — June 22, 2021

AustralianSuper: SDI AOP Data Supplements Traditional ESG Analytics

As part of our continuing series on highlighting the real-world use cases of the Sustainable Development Investment Asset Owner Platform (SDI AOP) data, we spoke to AustralianSuper’s Andrew Gray, Director ESG and Stewardship. Andrew shares his insights on the value the SDI AOP data is providing to his organization.  

1. You’re a founding member of the SDI AOP. What are you trying to achieve?

As a long-term investor, it’s important that we understand the drivers of long-term value to ensure we produce the best investment outcomes for our beneficiaries. The Sustainable Development Goals (SDGs) are the business plan for a sustainable long-term economy. Understanding how our investments contribute to the SDGs provides insights on how our assets are strategically positioned in the future economy. Ultimately, our aim is to invest for economically sustainable outcomes that create long-term value for members.

In collaboration with the other members of the SDI AOP, we are hoping to advance the adoption, integration and reporting on the SDGs among the investment community and investee companies.

2. What are the main reasons AustralianSuper subscribes to the SDI AOP data?

For us, this data is vital for understanding and tracking the progress our investee companies are making towards the SDGs and the contribution our portfolios are making to sustainable investment outcomes. It will help us to identify potential investment opportunities in SDG-aligned industries and businesses and measure and report our portfolio’s contribution to sustainable outcomes.

The SDI taxonomy specifically maps investments to the SDGs and its sub-goals on sustainability issues such as climate change, world hunger, water scarcity, healthcare access and social inequality. The SDG framework provides an adjunct to traditional ESG analytics and a broader view of sustainable investment impacts and opportunities for asset owners.This will enable us to assess the sustainability of company business models and measure the real-world outcomes of the investments we make.    

3. Which information from the SDI AOP dataset do you find most useful?  

The SDI AOP provides a range of data and insights which we apply across our ESG and Stewardship and Investment programs.  

The platform includes data for 8,000 listed companies, which our portfolio mapping analysis shows provides coverage of more than 95% of our aggregate Australian and international equities portfolio, which helps to inform our ESG and Stewardship activities. The platform then quantifies each company’s contribution to the SDGs so we can identify exactly which companies are exposed or well-placed to particular SDGs.

The research also provides insights into the rationale behind each company’s SDI classification, which is particularly relevant for us. We’re also very excited about the future release of forward-looking metrics which will enable outcomes-based reporting on the SDI outlooks of companies based on patents that are relatable to the SDGs.

4. Within AustralianSuper, which departments use the data?

We will look to use the information across AustralianSuper’s ESG and stewardship, asset allocation/portfolio management, asset class and reporting/communications teams.

5. Can you tell us more about what you do with it – and with what result?

Integration into investment decision making

At the asset level:
The SDI AOP helps us to assess how companies are placed in a future SDG-aligned economy. The data provides an overlay to our key value driver framework, where companies are assessed based on material ESG risks, to determine the value of companies. This data can also be used to identify and assess new investment opportunities in SDG-aligned industries and businesses which have the potential to create long-term value for members.

At the portfolio level:

In aggregate, the SDI AOP data provides a total portfolio view enabling our macro and asset allocation teams to identify top-down themes and trends to determine sectors which may benefit from a future SDG-aligned economy.

Stewardship activities
We are integrating this data analysis into our stewardship program to inform and progress how we engage with companies on their SDG contribution, measurement and reporting. Integrating these insights into our stewardship program enables us to have deeper conversations with companies on ESG issues, which ultimately can lead to better transparency and investment value outcomes for companies, investors and members.

We are committed to reviewing and improving our disclosure in line with industry developments and best practice. The SDI AOP data enables us to communicate the SDG contribution of our investments and portfolios to members and other stakeholders and demonstrate the positive impact we are having on sustainable outcomes. This is an important milestone in investor transparency as the industry focus shifts towards measurement and reporting of positive contributions to global challenges, as proposed in the PRI’s Investing with SDG Outcomes Framework.

6. How do you integrate the data in your systems?

The SDI AOP data is being integrated within the investment data platforms we use to map and monitor our portfolio holdings. We are also looking to integrate the data within our investment management system to expand its access and usage across the investment department.

7. To whom do you report about the SDIs and how?

AustralianSuper primarily reports on the SDGs to members and other stakeholders in its annual report published on our website. As we further develop and integrate our use of the SDI AOP we expect to expand our reporting across a broader range of communication channels and audiences. 

Related articles