NGS Green Shares. Turn your super green

With the exception of the Green Shares option, social and environmental criteria are not specifically taken into account in the selection of investments. The Green Shares option provides an investment for members who wish to take such criteria into account without imposing particular social or environmental constraints on the investments chosen by other members.

Consideration of social and environmental issues

The NGS Super Green Shares portfolio includes both international and Australian shares that have been selected on the basis of social and environmental ("green") criteria.

The Trustee itself does not select the individual companies in which it will invest for the Green Shares portfolio. Rather, it invests in investment funds that are variously described as "green", "sustainable", "ethical", "environmentally responsible" or "socially responsible" (or similar) that are managed by one or more external investment managers. The selected investment managers must follow their published green criteria and methodologies when choosing any individual company shareholding for inclusion in
their green investment funds.

The Trustee will appoint, and may remove, a Green Shares investment manager on the basis of its published investment criteria and methodologies, its selection of particular companies in which to invest, the overall performance of its green investment fund or any other matter that, as trustee of the Non-Government Schools Superannuation Fund, it considers to be appropriate.

In making its selection of Green Shares investment managers, the Trustee will give consideration to the factors shown below when assessing an investment manager’s green criteria and methodologies. However, to ensure that its selection process does not become unnecessarily inflexible, the Trustee has not formulated a policy as to:

• the relative weightings it will apply to these factors;
• whether these factors should be applied by the investment manager in a specific way to the realisation or retention of investments; or
• whether the absence of one or more of these objectives in an investment manager's green criteria and methodologies would preclude that investment manager or any particular investment fund from selection.

Green shares - positive criteria

The Trustee will look for particular objectives when considering an investment manager’s "positive" green criteria (for investing in certain Australian and international companies). An investment manager should undertake to invest only in companies that meet the following standards, where relevant:

LABOUR STANDARDS

• that adhere to local labour laws, International Labour Organisation core standards and local occupational health and safety laws; and
• that have an acceptable standard of working conditions for all staff.

ENVIRONMENTAL CONSIDERATIONS

• that take energy and resource use into account in product life-cycle management, from manufacture to recycling; and 
• that are actively addressing emissions, climate change issues and any other environmental challenges.

SOCIAL CONSIDERATIONS

• that have active indigenous relations and community involvement programs; and 
• that are actively addressing any social challenges.

ETHICAL CONSIDERATIONS

• that meet fundamental human rights; and 
• that articulate and implement a code of conduct. 

GOVERNANCE CONSIDERATIONS 

• that meet corporate governance guidelines on board structures and remuneration. 

OTHER CONSIDERATIONS

• where applicable, are managers seeking out "industry of the future" companies whose growth prospects are driven by a social and environmental sustainability imperative (for example, particular companies in sectors such as education, training, health care, renewable energy or public transport); and 
• where applicable, are identifiable as a "corporate responsibility leader" in more traditional sectors of the economy (for example, companies that take a proactive green approach to managing issues related to the workplace, community, environment, value chain, corporate governance and business ethics).   

Green shares - negative criteria

The Trustee will look for particular objectives when considering an investment manager's "negative" green criteria (for not investing in certain Australian and international companies). The investment manager should undertake not to invest in companies that, where relevant:

• fail to comply with local labour laws or the International Labour Organisation's core standards and/or environmental, social, ethical or governance considerations; 
• exploit child labour; 
• demonstrate poor corporate responsibility; 
• rate poorly on genetically modified organism or animal rights criteria; and
• have a material exposure to (that is, derive more than 10% of their total revenue from) sectors considered to have a high negative social impact, such as alcohol, arms, gambling, nuclear power, pornography or tobacco. 

The Trustee will not inquire as to whether an investment manager:

• has a process to apply a negative screen to any related entities of a company that it may invest in; or 
• has the capacity to determine whether any company has any indirect association with companies that do not meet Green Shares investment criteria. 

Green shares - methodology

The Trustee will look for the following factors regarding green shares selection methodology when considering an investment manager for selection:

• whether there is a clear description of the end-to-end process used by the investment manager to determine if a particular company is suitable for inclusion in its green shares portfolio; 
• whether any aspects of the process are outsourced and, if so, to whom; 
• which (if any) benchmarks and indices are used by the investment manager; 
• whether any "best practice" criteria are included in the methodology;  
• what (if any) hedging measures are used in relation to any international share investments; 
• whether the methodology used by the investment manager might lead to investment in a company that could be inappropriate for inclusion in the NGS Super Green Shares investment option; and 
• whether there is a description of a process that will be used by the investment manager to sell down any investment that ceases to comply with its green standards. 

The Trustee does not have any mechanism to measure the extent to which a selected investment manager is successful in meeting its green investment criteria, nor can it guarantee that a investment manager will always follow its stated methodologies.

For more information call 1300 133 177.