Summary of responses to the PRI reporting and assessment tool 2008

Eureka Funds Management

Organisational Overview
1. What were your organisation's total assets under management as of 31 December 2007 (in millions)?3140
Please select currencyAustralian dollar (AUD)
1a. If 'Other' was selected, please specify the other currency here
2. What category would best describe your organisation?
3. What proportion (in %) of your fund is defined benefit and what proportion (in %) is defined contribution? (please only answer this question if you answered “Pension or superannuation or retirement or provident fund or plan” to Q2)
Defined benefit
Defined contribution
4. Please provide an overview of your asset mix as of 31 December 2007 (in %):
Listed equity (developed market, active)0
Listed equity (developed market, passive)0
Listed equity (emerging market, active)0
Listed equity (emerging market, passive)0
Fixed income - developed markets0
Fixed income - emerging markets0
Real estate or property100
Private equity0
Hedge fund0
Infrastructure0
Currency0
Commodities0
Cash0
Other (Please specify): 0
5. Please indicate what percentage of your assets are managed internally and what percentage are managed externally (in %):
 
Internal
External
Listed equity (developed market, active)00
Listed equity (developed market, passive)00
Listed equity (emerging market, active)00
Listed equity (emerging market, passive)00
Fixed income - developed markets00
Fixed income - emerging markets00
Real estate or property1000
Private equity00
Hedge fund00
Infrastructure00
Currency00
Commodities00
Cash00
Other (Please specify): 00
Principle 1
7. Do you have a formal investment policy statement that makes specific reference to the integration of responsible investment (RI) or environmental, social and governance (ESG) issues within investment decision making and ownership practices?
8. Do you have a statement that makes specific reference to the integration of responsible investment (RI) or environmental, social and governance (ESG) issues within investment decision making and ownership practices?Yes, it is an independent RI/ESG statement
9. In what year were RI/ESG issues first formally addressed in a policy statement (integrated or independent)?2007
10. Has your statement that makes specific reference to the integration of RI or ESG issues been disclosed publicly?No
11. Please indicate how this statement that makes specific reference to the integration of RI or ESG issues can be obtained (a URL would be sufficient):Eureka's sustainability policy has not been disclosed publically and is only available upon request.
12. For what percentage of your internal assets under management do you integrate RI/ESG issues into your internal investment decision-making processes? (in %)
Listed equity (developed market, active)
Listed equity (developed market, passive)
Listed equity (emerging market, active)
Listed equity (emerging market, passive)
Fixed income - developed markets
Fixed income - emerging markets
Real estate or property100
Private equity
Hedge fund
Infrastructure
Currency
Commodities
Cash
{inst1}
13. To what extent have you integrated RI/ESG issues into your internal investment decision-making processes?
Listed equity (developed market, active)To a moderate extent
14. For what percentage of your external assets under management are RI/ESG issues integrated into the investment decision-making processes of your external investment managers? (in %)
Listed equity (developed market, active)
Listed equity (developed market, passive)
Listed equity (emerging market, active)
Listed equity (emerging market, passive)
Fixed income - developed markets
Fixed income - emerging markets
Real estate or property
Private equity
Hedge fund
Infrastructure
Currency
Commodities
Cash
{inst}
16. What proportion of your assets involve screening out or excluding stocks or sectors based on ethical (rather than long-term financial) criteria? (in %)
17. Do you have any staff dedicated to RI/ESG issue analysis and/or implementation?
 
Dedicated
Combined full-time equivalents
Investment analyst00
Research analyst00
RI/ESG issue policy advisor00
(proxy) Voting specialist00
Engagement specialist00
Portfolio manager00
Other (Please specify):00
18. Which Board committee or other executive body has overall responsibility for RI/ESG issues?An Investment Committee, comprising of Eureka’s senior executives, is responsible for approving the acquisition of properties in accordance with the principals of responsible investment set out in Eureka’s sustainability policy. The Board of Eureka’s management company has the ultimate responsibility for RI/ESG issues across the business and the assets under its management. This Board comprises of 4 founding executive directors and 1 non-executive director.
19. Do you assess the capabilities of internal investment staff to incorporate RI/ESG issues?Planning to in 2008
20. Do you assess the capabilities of external investment managers to incorporate RI/ESG issues?No Answer
21. Approximately what percentage of your internal non-ESG-specialist investment management staff received RI/ESG training in 2007? (in %)100
22. What forms of RI/ESG training or awareness raising have been invested in, encouraged or provided for internal staff (investment and other)?Informal internal training,Formal internal training,Conferences,Regular briefings on key issues
23. Did you support the development of nonproprietary RI/ESG issue-related tools, metrics, analysis or academic research in 2007?To a small extent
24. Please indicate how the results of nonproprietary RI/ESG issue-related tools, metrics, analysis or academic research development you supported can be obtained if they have been disclosed publicly (a URL would be sufficient):Not publically available.
25. Have you advocated/supported/ encouraged/participated in RI/ESG issue-related industry-wide training for investment professionals during 2007?Sponsored industry events,Spoke at or attended conferences,Had dialogue or exchanges with peers
26. What was your most significant achievement in 2007 in relation to your implementation of Principle 1?To underpin our commitment to responsible investment practice, a culture of transparency and good governance, Eureka formalised a sustainability policy which provides a framework for fostering the Principals of Responsible Investment. The policy is a critical part of Eureka’s investment decision making platform which aims to identify, quantify, evaluate and manage the risks of real estate investment. A comprehensive executive training programme has also been developed to enhance the effectiveness of integrating sustainable and responsible investment into Eureka’s decision making process. The programme includes both internal and external training on long term sustainability issues such as governance, compliance, anti-money laundering, climate change, health and safety management etc.
27. What was your biggest barrier in 2007 with relation to your implementation of Principle 1?As well as maintaining a high level of social and governance standards, Eureka’s focus during 2007 was on mitigating the environmental impact of our investment decision making. Akin to most investment markets, the analysis of property investment opportunities is often time pressured. Experience and expertise are important in the due diligence process and the analysis of many risks is often outsourced to specialist consultants. In Eureka’s case, the assessment of an investment opportunity’s environmental footprint is outsourced. The biggest issue faced in 2007 was the extensive lead time required for the environmental assessments to be prepared for standing assets. Moving forward, assessment lead times should diminish as the number of consultants in the field grows and roll out of environmental audits as part of property management practices increases. Real estate due diligence information is also likely to change, with independent environmental assessments becoming a standard requirement.
28. Please add any overall comments and clarifications related to Principle 1 here.Enter text response here.
Principle 2
29. To what extent did you employ the following approaches in your 2007 active ownership strategy for listed equities?
(Proxy) votingNo Answer
Direct engagement conducted privatelyNo Answer
Direct engagement conducted publiclyNo Answer
Collaborative engagementNo Answer
Filing shareholder resolutionsNo Answer
Co-filing shareholder resolutionsNo Answer
Other (Please specify):No Answer
30. To what extent did you employ the following approaches in your 2007 active ownership strategy for all asset classes other than listed equity?
(Proxy) votingNot at all
Direct engagement conducted privatelyNot at all
Direct engagement conducted publiclyNot at all
Collaborative engagementNot at all
Other (Please specify): N/A Not at all
31. Do you have a (proxy) voting policy?No
32. To what extent does your (proxy) voting policy direct action on ESG issues? For each issue, please indicate the extent of direction.
EnvironmentalNo Answer
SocialNo Answer
GovernanceNo Answer
33. Does your (proxy) voting policy apply to all voting regions (where possible)?No Answer
34. Please indicate how your (proxy) voting policy can be obtained (a URL would be sufficient):No Answer
35. Do you ensure that voting is done in accordance with your (proxy) voting policy?No Answer
36. What percentage of total votes cast were against management? (in %)No Answer
37. What percentage of shareholder resolutions relating to environmental, social or governance issues was supported? (in %)
Environmental
Social
Governance
38. Do you conduct (proxy) voting on behalf of your clients?No
39. How many shareholder resolutions related to RI/ESG issues did you participate in during 2007?
As lead filer
As co-filer
Planning to be lead filer in 2008
Planning to be co-filer in 2008
40. How were portfolio companies engaged with in 2007? Please check all that apply.No Answer
41. Do you systematically bring RI/ESG issue-related engagement opportunities to your clients?No Answer
43. How many portfolio companies did you engage directly/were engaged on your behalf on ESG issues in 2007?
 
Extensive engagement
Moderate engagement
Basic engagement
Environmental
Social
Governance
44. What RI/ESG-related issues were addressed in your shareowner engagement initiatives? Please check all that apply.No Answer
45. How were RI/ESG issue-related engagement targets and topics identified? Please check all that apply.No Answer
46. Do you set RI/ESG issue-related engagement objectives and attempt to evaluate success?No Answer
47. Have you sought evidence relating to the effectiveness of your active ownership strategy? Please check all that apply.No Answer
48. What was your most significant achievement in 2007 in relation to your implementation of Principle 2?During 2007, Eureka lobbied its major external hotel manager to develop their own ESG policy and procedures and to set ESG related KPIs for their key executives and general managers. In partnership with the hotel manager, Eureka is now implementing a number of environmental conservation strategies across all its hotel assets. Significant savings are already being achieved with one asset making an 18% reduction in energy consumption, 30% reduction in water and a 75% reduction in landfill waste over the last two years with little or no capital expenditure cost. The management strategies being employed across Eureka’s portfolio are now being used as a case study for the hotel manager’s interests globally.
49. What was your biggest barrier in 2007 with relation to your implementation of Principle 2?Realising a greater return on investment by dealing with a range of ESG issues is welcomed by Eureka and there are a number of no cost or value added management strategies that will markedly improve the social and environmental performance of most properties whilst delivering an adequate financial return. However, there a significant number of ESG issues that have capital intensive solutions which are often challenged by their low or no return on cost. Given Eureka’s responsibility to its investors, if non-mandatory solutions are not proven to add the required value, or at least not dilute value they will not be pursued. Whilst return on cost hurdles are the most significant barrier to incorporating ESG into real estate ownership, the number of cost-effective strategies to improve ESG performance are vast and Eureka has a significant challenge ahead to meet them all.
50. Please add any overall comments and clarifications related to Principle 2 here.Questions 29 - 47 have not been answered as they are not considered relevant to Eureka's business operation of direct property investment and management.
Principle 3
51. Have you asked that investee companies (or other investment entities) produce standardized reporting on their RI/ESG issue policies, practices or performance (within annual financial reports or other formats)?To a moderate extent
52. What format of standardized reporting on RI/ESG issue policies, practices or performance have you requested?Other (please specify): 'Monthly property environmental reporting.'
53. Have you provided feedback to investee companies (or other investment entities) on their reporting on RI/ESG issues?Planning to in 2008
54. Have you sought information from companies regarding their adoption of/adherence to norms, standards, codes of conduct or international initiatives related to RI/ESG issues?
AdoptionTo a moderate extent
AdherenceTo a moderate extent
55. Which norms, standards, codes of conduct or international initiatives related to RI/ESG issues have you sought information about from companies, with regard to their adoption of/adherence to?Other (please specify): 'E.g. seek reports on compliance with Australian building standards, saftey standards, minimum employee workcover insurances etc.'
56. What was your most significant achievement in 2007 in relation to your implementation of Principle 3?In 2007 Eureka established a standard audit and reporting tool for the collection of Energy, Water and Waste consumption information from the properties we manage. The reports are used by Eureka's management team to monitor consumption, manage mitigation strategies and to report progress against benchmarks.
57. What was your biggest barrier in 2007 with relation to your implementation of Principle 3?In our experience the transfer of information from property agents and engineers to Eureka management is impeeded by their lack of knowledge and in some cases lack of appreciation for environmental issues. With out a financial incentive the extraction of timely and effective reports from property agents can be difficult.
58. Please add any overall comments and clarifications related to Principle 3 here.Enter text response here.
Principle 4
59. Are you considering RI/ESG requirements when searching for and selecting the following?
External investment managerNot applicable
Investment consultantNot applicable
Proxy votingNot applicable
Engagement overlayYes
Investment researchYes
Internal operations (for example, purchasing, travel, office space etc.)Yes
Contractural relationships with external service providers, joint venture partners etc.
60. Have you linked the following to performance on RI/ESG issues?
Investment monitoringYes
Incentive structure (internal investments)No
Incentive structure (external investments)Not applicable
Contractual relationships with external investment managersNot applicable
61. Are the default pension funds or retirement plans offered to your employees also signatories to the PRI?Yes
62. To what extent do you encourage your service providers to become PRI signatories?Planning to in 2008
63. To what extent do you encourage your clients to become PRI signatories?Planning to in 2008
64. To what extent do you encourage peer organisations to become PRI signatories?Planning to in 2008
65. Do you have evidence that you have played a role in the improved integration of RI/ESG issues by external investment managers?No Answer
66. Does your broker evaluation process include an ESG component or do you have a budget to pay cash for ESG broker research?Not applicable
67. Have you revisited any relationships with service providers in light of RI/ESG issue-related capabilities?No
68. Have you engaged in dialogue, lobbying or initiatives pertaining to government policy and/or industry regulations (for example, stock exchanges, accounting standards) related to RI/ESG issues in 2007?To a moderate extent
69. What was your most significant achievement in 2007 in relation to your implementation of Principle 4?In early 2007 Eureka implemented an online business management platform which makes the organisations policies and procedures available to all staff. Staff are required to complete assessments on policy areas such as human resources, compliance, risk management and corporate governance. The programme was introduced for staff to obtain a thorough understanding of the values of responsible investment in funds management, and that those values are conveyed to our clients when we engage them.
70. What was your biggest barrier in 2007 with relation to your implementation of Principle 4?Scepticism, whilst fading, still exists amongst many institutional investors and their advisors as to the benefit of incorporating environmental and to a lessor extent social analysis in decision making. While some may argue it is one in the same, good governance is highly regarded and commonly accepted as integral to decision making. A lack of knowledge of the analytical evidence that ties environmental and social management to performance appears to be the basis of the scepticism.
71. Please add any overall comments and clarifications related to Principle 4 here.Eureka became a signatory to the UNPRI in December 2007. As more time permits in 2008 we are looking forward to engcouraging our clients and stakeholders to become PRI signatories.
Principle 5
72. Did you use the PRI Engagement Clearinghouse in 2007?Planning to in 2008
73. Did your use of the clearinghouse result in subsequent action or collaboration with other signatories?No Answer
74. Please elaborate on how the PRI Engagement Clearinghouse could be made more useful:After joining the PRI in December 2007, Eureka has had limited time to make use of the PRI Clearinghouse and is therefore not in a position to comment.
75. To what extent do you participate in the following RI/ESG issue-related collaborative engagement initiatives and/or industry associations? For those not listed, please use the "other" field:Investor Group on Climate Change, Australia/New Zealand (IGCC),United Nations Environmental Program Finance Initiative (UNEP FI),Other (please specify): ''
77. What was your most significant achievement in 2007 in relation to your implementation of Principle 5?Two of Eureka's hotel assets participated in the City of Melbourne, Australia "Savings in the City" environmental programme aimed at cutting energy, water and waste consumption in order to achieve the City's zero net emissions target. The programme provides a forum within which the participating hotels, City of Melbourne and programme partners can develop and share environmental management strategies. Encouragingly Eureka's two assets are ranked equal fourth and outright first in their environmental performance. Please refer to http://www.melbourne.vic.gov.au/info.cfm?top=218&pg=2546
78. What was your biggest barrier in 2007 with relation to your implementation of Principle 5?Due to our relatively small number of staff it is unlikely that Eureka will have staff dedicated full time to ESG. Whilst the principles of ESG are so fundamental that they are part of key performance indicators for Eureka staff, workload can often conflict with the time demanded by some collaborative engagement initiatives.
79. Please add any overall comments and clarifications related to Principle 5 here.Question 75 - Other: Clean Energy Council of Australia, Property Council of Australia's Sustainability Committee and Tourism Taskforce
Principle 6
80. Have you disclosed how RI/ESG issues are integrated into your investment processes?Yes - to clients or beneficiaries and the public
81. Please indicated how this disclosure of how RI/ESG issues are integrated into your investment processes can be obtained (a URL would be sufficient):A copy of the 2007 Eureka Sustainability Report can be found at http://www.eurekafm.com.au/about_sustainability
82. To what extent do you disclose your annual (proxy) voting record?Not at all
83. Please indicated how your (proxy) voting record can be obtained (a URL would be sufficient):No Answer
84. Do you systematically report (privately and/or publicly) on your RI/ESG issue-related engagement activities, results and progress?No Answer
85. Please indicate how your reporting on RI/ESG issue-related engagement activities, results and progress can be obtained (if it is publicly available, a URL would be sufficient):No Answer
88. Are you undertaking any additional efforts to raise awareness of the PRI and RI/ESG issues amongst stakeholders?Planning to in 2008
89. What evidence do you have of the impact on external investment manager practices? Please check those that apply.No Answer
90. Have you sought to determine what impact your overall RI/ESG issue-related efforts (voting and engagement, investment decision making, disclosure, etc.) have had on corporate behavior or performance?To a moderate extent
91. Have you sought to determine what impact your RI/ESG issue-related approach has had on the performance of your portfolio?To a large extent
92. Have you sought to determine what impact your RI/ESG issue-related efforts, requests and guidance have had on the consideration of RI/ESG issues by your external service providers excluding external investment managers (for example: research providers, consultants, etc.)?To a small extent
93. Do you report on progress and/or achievements relating to the PRI or RI, and how would you like to publish your response to this assessment?Please automatically publish our responses to the reporting and assessment tool in full on the PRI website
94. What was your most significant achievement in 2007 in relation to your implementation of Principle 6?In November 2007, Eureka published its first Sustainability Report. The report gives an overview of our performance to date and sets specific targets in key areas of focus such as Employees, Environment, Community and Governance. Posted on our website, the report offers an opportunity to be transparent about our commitment to sustainability and provides a platform to promote the six principals of responsible investment amongst our institutional clients and our stakeholders.
95. What was your biggest barrier in 2007 with relation to your implementation of Principle 6?The biggest barrier in reporting Eureka’s progress against ESG has been the retrieval of reliable ‘base line’ environmental consumption data from which reduction targets are now set.
96. Please add any overall comments and clarifications related to Principle 6 here.Question 82 - proxy voting is not relevant to Eureka's core business. Question 84 (due to system error, answer to this question is provided in this text box - Answer: To a large extent. A copy of the 2007 Eureka Sustainability Report can be found at http://www.eurekafm.com.au/about_sustainability
Emerging Markets
97. To what extent have you actively thought about how to integrate RI/ESG issues within investment decision making and ownership practices with regards to emerging markets investments?Not at all
98. Please describe your activities with regards to integrating RI/ESG issues within investment decision making and ownership practices with regards to emerging markets investments.Eureka does not have a mandate to invest in emerging markets
99. To what extent do you believe the integration of ESG issues in emerging markets is as relevant as the integration of ESG issues in other markets?No Answer
100. To what extent did you employ the following approaches in your 2007 active ownership strategy in emerging markets?
(Proxy) votingNot Applicable
Direct engagement conducted privatelyNot Applicable
Direct engagement conducted publiclyNot Applicable
Collaborative engagementNot Applicable
Filing shareholder resolutionsNot Applicable
Co-filing shareholder resolutionsNot Applicable
Other (Please specify): na Not Applicable
na
101. To what extent have you developed a comprehensive RI/ESG engagement capability regarding business activities in emerging markets?Not Applicable
102. Please list the three most often addressed RI/ESG-related issues in your shareholder engagement initiatives in emerging markets?
1.
2.
3.
103. Have you sought information from companies regarding their adoption of/adherence to norms, standards, codes of conduct or international initiatives related to RI/ESG issues in emerging markets?
AdoptionNo Answer
AdherenceNo Answer
104. Do you take RI/ESG considerations into account when selecting and approving emerging markets external investment managers?No Answer
105. Do your consultants factor RI/ESG issues into their short listing of emerging markets external investment managers?No Answer
106. Do you have evidence that you have played a role in the improved integration of RI/ESG issues by external investment managers investing in emerging markets?No Answer
107. To what extent have you worked together with other investors to improve the effectiveness of implementing the PRI in emerging markets?No Answer
108. Are you undertaking any additional efforts to raise awareness of RI/ESG issues in emerging markets?No Answer
109. Have you sought to determine what impact your RI/ESG issue-related efforts (voting and engagement, investment decision making, disclosure, etc.) have had on corporate behaviour or performance in emerging markets?No Answer
110. Please add any overall comments and clarifications related to the PRI in emerging markets here.Australian and New Zealand mandate only
111. What is your top PRI-related goal/priority for emerging markets in 2008?
Closing Comments
112. Why did your organisation join the PRI?UNPRI provides Eureka with a standard framework to measure its progress in meeting the challenges of ESG issues. It’s also a framework for our clients to use to assess Eureka in light of our competitors. Furthermore, UNPRI provides a network of industry peers amongst which information, research and experiences are shared in order to future proof the value of our portfolios and the environments in which they stand.
113. Please describe the benefits you have enjoyed as a result of signing the PRI:In Eureka's short period of signatory to UNPRI the initial benefit is that by association we have proof of commitment to the values of the UNPRI which are fundamental to our business' fiduciary responsibility to our institutional clients.
114. To what extent do you believe the PRI has succeeded in changing investor behaviour and/or raising awareness or capacity on RI/ESG issues? Do you have any examples you could share?Previously, it has been common place for our clients (Australian superannuation funds) to due diligence Eureka’s ESG position prior to their investment and subsequent client reporting requirements have generally been more financial/return biased. However, during 2007 an increasing number of clients directly engaged Eureka on ESG issues, some with particular reference to the UNPRI. Engagement typically sought information on Eureka’s process / procedure and methodologies around responsible investment. Eureka expect that ESG reporting will be a standard requirement of institutional clients in the near future
115. What are the top three activities the PRI Secretariat could undertake to enhance and encourage further implementation of the PRI by current and prospective signatories?
1.1. Expand on the book review section of the intranet to also review papers and research material which prove the returns of responsible investment.
2.2. Continue to provide a forum whereby industry peers can collaborate in the lobbying of governments for a framework that will yield a better ESG environment across the globe.
3.3. Make the public disclosure of all signatory responses to this survey mandatory to ensure that UNPRI is approached seriously and not as a marketing exercise.
116. What are your top three PRI-related goals/priorities for 2008?
1.Formally adopt environmental management targets into the key performance indicators of Eureka staff.
2.Share case studies of Eureka's environmental management of hotels with forums such as the UNPRI and UNEPFI property working group.
3.Formalise ESG engagement with Eureka clients and stakeholders, encouraging those who have not done so to join the UNPRI.
117. Please rank the six principles from most difficult to implement to least difficult to implement:
Most difficult
1
Principle 4
2Principle 3
3Principle 5
4Principle 6
5Principle 1
Least difficult
6
Principle 2