ACSI’s Governance Guidelines are a clear statement of our members’ expectations about the governance practices of the companies in which they invest. The purpose of our Guidelines is to provide insights about governance issues which are of material concern to our members. The Guidelines articulate the issues that we focus on in our engagement work with companies and the factors we take into consideration when determining our voting recommendations.
We focus on financially material sustainability and governance risks and opportunities over the long-term, to protect and enhance the retirement savings entrusted to our members.
The following core principles underpin the Guidelines:
Board oversight of all material risks
Good governance requires boards to consider and oversee material ESG risks at the company, sector and market-wide level.
Sustainable, long-term value creation
Effective board governance contributes shareholder value and creates the conditions in which sustainable long-term investment can prosper. ACSI engages with companies to encourage the adoption of good governance, improved disclosure and effective risk management practices to improve investment outcomes for our members and their beneficiaries, in line with the duty of superannuation funds to act in the best financial interests of their beneficiaries.
Investor Stewardship
Investor stewardship seeks to preserve investment value. It includes institutional investors using ownership rights to influence the governance, policies, practices and management of the entities in which they invest. Investor activities include exercising the voting rights attached to shareholdings, engagement with the boards and management of portfolio companies and advocacy for public policy settings aligned with the interests of long-term investors.
Transparency
Companies should properly disclose their performance in relation to material ESG factors which could impact shareholder value. Companies are more likely to attract long-term capital if they disclose sufficient information to give investors confidence in the identification and management of key ESG risks.
Social license to operate
Companies rely on a range of stakeholders to operate and succeed, including:
- Governments
- Employees
- Communities and broader society
- Investors
- Consumers and suppliers.
Effectively engaging with stakeholders is key to maintaining a social license to operate.
Materiality
In conducting stewardship activities, ACSI is focused on material ESG risks and opportunities. Not all risks are material for all companies – ACSI focuses on the risks most material to each company.