Bringing a legal perspective into ESG investing May 2020

Skye+king

NGS Super's manager of investment governance and legal, and winner of this year's ACSI Michael O'Sullivan ESG Rising Star Award, thinks that superannuation and investment leaders can make a positive impact for the future.

We dig into the strange journey that brought her into the superannuation industry, how her legal training helps support quality ESG investing, and using ESG principles to create better outcomes for members.

What inspired you to focus on ESG?

When I made the decision to move to NGS Super in late 2018, one of the drawcards of the role was that I would be responsible for leading our ESG (Environmental, Social and Governance) initiatives. Being able to work in ESG has been the most rewarding part of my career to date. I am extremely passionate about making a difference, striving for better at every possible opportunity and inspiring others to operate in this way. Working in ESG allows me to do this, while making meaningful change in what I see as three very important spheres:

  1. Member outcomes: I believe that true integration of ESG within the investment process delivers better risk adjusted investment returns to members, which in turn improves investment and retirement outcomes for members.
  2. Pushing companies to strive for better: A big part of ESG integration is understanding the ESG risks associated with various investments and responding accordingly. Responding doesn’t mean divestment. If you divest, you lose all influence. I prefer the engagement approach which is centred around encouraging action or better behaviour by the companies in which we invest.
  3. Benefiting society: Encouraging companies to have better ESG practices has a beautiful flow on effect which benefits our society. Whether it’s engaging on human rights issues to better company policy and behaviour or encouraging companies to assess and respond to the risks associate with climate change; when you get outcomes or force change, society benefits.
How does your legal education influence your decision making around investments?

My legal training has been very useful over my entire career. My role is to support the broader investment team throughout both the initial and ongoing due diligence of our investment managers. My legal training has equipped me to identify, assess and where possible mitigate or transfer risks. A big part of this is done through our operational due diligence and risk assessment framework. This framework has strengthened our due diligence process by allowing us to identify potential operational risks within our investment managers and mitigate, transfer or if appropriate, accept these risks prior to finalising any investment. This results in an added layer of protection to the Fund and our members.

You’re involved with the Super Impact Committee at NGS, currently as the chair. What difference can an organisation make by changing internal processes?

With the support of our CEO, Laura Wright at the beginning of 2020 we established the NGS Super Internal Impact Committee. Any organisation can make a difference or “impact” as we like to call it if they put their mind to it. It’s not hard, it doesn’t have to cost money and it promotes engagement and connection with staff, the community and stakeholders. You just need to think outside the box. We focus on making an impact through:

• Social procurement – we will review what we buy as a Fund and where possible make our existing spend count to increase our positive impact, and

• Sustainability – we will look at our internal practices and implement more sustainable solutions to lessen our negative impact on the environment.

Organisations can start small and I recommend all organisations try and make a difference where they can. Reviewing things like where you source your catering from; what cleaning products you use in your office kitchens; is your printer paper responsibly sourced; are your promotional items negatively contributing to the circular economy objectives? I would strongly encourage all organisations try and make incremental changes to already existing purchase decisions to make their spend have a positive impact. The world and society will thank you for it.

How do members benefit from responsible internal processes in an industry fund like NGS?

We have a fiduciary duty to our members to act in their best interest. Integration of responsible investment practices within the investment selection and monitoring process provides an additional layer of risk assessment and opportunity for risk mitigation which ultimately aids in providing members with better risk adjusted returns.

You’ve been around finance through most of your professional career. What attracted you to the industry?

I didn’t set out to work in superannuation and somewhat fell into the industry early in my career. I worked as a casual superannuation administrator while at high school and through university and was lucky enough to land a full-time role after finishing my first university degree. I am very glad I fell into the industry as I love the profit-to-member ethos and feel like my values are aligned to the industry. I am very grateful as I have learnt so much over my career being afforded opportunities to work in roles that had allot of breath which has ensured I have a well-rounded skill set across most aspects of superannuation.

As a “rising star,” you’re someone who people will look to for inspiration. What is something you’ve learned in your time in the industry that you’d pass back to yourself when you were first getting started?

I truly hope I can be an inspiration. My biggest learning, which has only been a recent one, is to be mindful and “in tune” to what makes you tick as a person and try and foster this within your career. Try and think less about “what you should do” and more about “what you love to do”. You don’t have to change jobs to achieve this. It can be a simple as putting your hand up to be involved in something that really interests you within your workplace, or volunteer. It may be additional work – but nothing good comes easy. If you are passionate about something and you have drive and determination, it can only result is something amazing. It’s not work when it’s your passion.

I only really uncovered my passion for ESG approximately two years ago. Part of me wishes I fostered this earlier in my career. I was definitely a victim of having the career progression blinkers on and climbing the ladder. However, if you are like me and this has been a later realisation, it’s ok as I am a firm believer that the journey is just as important as the destination and I don’t’ think I would be the person I am today without having walked the path I have walked. It’s never too late to make a change or make a difference.

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