John Pearce

UniSuper, the $135 billion superannuation fund open to all Australians, today announced it has committed up to USD400m to Macquarie Green Energy and Climate Opportunities Fund (MGECO), investing in the global energy transition and climate opportunities.

MGECO is an open-ended fund that invests in large scale, mature sustainable technologies to support the transition to net zero and help meet sustainable energy needs in Australia and overseas. It aims to provide diversified exposure to the global renewable sector with a growing pipeline of opportunities across geographies, technologies, power markets, renewable resources and asset lifecycle stages.

MGECO targets a portfolio that aims to be resilient across the economic cycle with an initial focus on assets in hard to access sectors and geographies that provide opportunity for growth. The portfolio is expected to include six seed investments across Australia, Asia, US and Europe. These businesses will provide initial access to approximately 100 underlying projects across onshore and offshore wind, solar, storage and carbon related projects.

The investments include Aula Energy, an onshore renewable energy business that plans to develop, build and operate utility-scale wind, solar and integrated battery projects across the Australian and New Zealand markets to create a diversified portfolio of actively managed green energy generation assets for the future. Aula has secured an initial ~4 gigawatts of advanced development rights comprising wind and solar developments from Western Australia to South Australia and the eastern states and is expected to expand and grow over time.

UniSuper’s Chief Investment Officer, John Pearce said UniSuper is a significant investor of the Fund and will be investing alongside Macquarie’s balance sheet.

“This is an investment of scale and quality with a pipeline of opportunities helping to accelerate the transition to net zero. It will enable UniSuper to invest across technologies and geographies in projects that we believe will generate attractive long term returns for our members.

The energy transition will require mature sustainable technologies to meet net zero targets in Australia and around the world. Macquarie is one of the most experienced managers in this space with deep expertise, strong financial backing and a proven track record, their experienced on the ground investment and operational teams and global networks are second to none. The investment supports UniSuper’s strategy to develop smart partnerships with high quality, aligned managers to complement our in-house investment capability.”

MGECO’s structure and long-term investment horizon aligns both with the nature of the investments and with UniSuper’s members many of whom will be investing their retirement savings for many years to come.

UniSuper continues to work towards its objective to achieve net zero in its investment portfolio by 2050 and to contribute to Australia’s goal to achieve a 43% reduction in emissions by 2030.

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John Pearce

UniSuper is pleased to provide an update on returns for the 22/23 financial year. Members will be reassured that all UniSuper investment options delivered positive returns for the 2022/23 financial year, a year that had no shortage of bad news with the ongoing war in Ukraine, high inflation, and the fastest rate hike cycle in decades.

In FY22/23, all our investment options recorded positive returns, with our (default) Balanced option recording 10.3% (or 11.8% for zero-tax pension accounts) – UniSuper is very proud to deliver for our members.

The highest performing investment options were UniSuper’s Global Companies in Asia at 21.0%, and International Shares at 16.4%.

Global Companies in Asia seeks companies that are well placed to benefit from the growing wealth of Asian consumers. Over 20% of the portfolio is invested in the tech giants that are being swept up in “AI euphoria”. Similarly, over 16% of the International Shares option is exposed to tech companies deemed to be at the forefront of AI.

Of our pre-mixed investment options, the top performers were the High Growth (14.0%) followed by Sustainable High Growth (13.8%). These strong returns are key to delivering the retirement outcomes our members expect, deserve and rely upon.

For those members within our Defined Benefit Division, our defined benefit fund remains in a strong surplus and our members’ accrued benefits are well funded.

As active, genuine long-term investors, we believe UniSuper’s portfolios are well positioned to deliver industry leading value to our members as they build and enjoy remarkable retirements.

Quotes attributable to John Pearce, UniSuper’s Chief Investment Officer “While it was good to see the Balanced option hit double digit returns for the financial year, our focus is always on the longer term. In that regard we are confident that current portfolio settings, with a quality bias and ample liquidity, places us in good stead to deliver on long term objectives.”

17 January 2023

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Yolanda Beattie

Future IM/Pact has announced four new partners of its program to improve diversity in Australian investing: the $105bn UniSuper, $150bn Aware Super, $83bn Pinnacle Investment Management and $2bn TDM Growth Partners.

The announcements means six of the top 10 Australian asset owners are now backing the program (ART, Aware Super, UniSuper, QIC, VFMC and HESTA).

Founded in 2018 by Yolanda Beattie, Future IM/Pact connects Australia’s leading investment houses with women at university and in their early career, and informs them about a career in investing. Events, mentoring and investment competitions inspire and engage young investors, creating a talent pool for partners’ intern, graduate and analyst roles.

Aware Super Chief Investment Officer Damian Graham said as one of the nation’s largest superannuation funds, Aware not only acknowledged the link between diversity and stronger investment outcomes, but was committed to redressing the gender super gap through a holistic diversity strategy.

“To address imbalances such as Australia’s 14.1% gender pay gap and its resulting erosion of women’s retirement security, we recognise the need for a wide range of experience and perspectives to make the best investment decisions for our more than 1.1 million members.

“Currently we have around four times as many men as women apply for investment roles, and we are actively championing initiatives so our industry focuses on attracting women to front-line investment roles.

“It’s also why we are committed to working with our peers through Future IM/Pact.”

Better diversity, better outcomes

UniSuper CIO John Pearce said the fund’s commitment to diversity, equity and inclusion (DEI) was a key component of its talent management strategy.

“Different perspectives, experiences and skills are key to high performing teams. With a significant amount of funds managed in house, we have a lot of scope to develop exceptional talent, which in turn ensures we best deliver for our members. ” Mr Pearce said.

Pinnacle Founder and Managing Director Ian Macoun said building a groundswell of female talent at the grassroots level had to be part of the investment industry’s approach to addressing its lack of gender diversity.

“Pinnacle has been supporting and inspiring great female talent for several years through scholarships and internships. There are so many exciting pathways a career in finance can take and the highly diverse nature of our global multi-affiliate business provides great opportunity for young professionals.

We have a responsibility to promote these pathways, particularly to up and coming female talent, and ensure students and graduates have the support they need for a long and successful career in finance. Our partnership with Future IM/Pact will help achieve this and ultimately promote greater gender diversity in Finance.”

Head of TDM Growth Partners Foundation, Roly Clifton-Bligh, said people and culture was a critical element of the fund’s investment process and joining Future IM/Pact was consistent with that philosophy.

“We only invest in companies that have a proven track record in attracting great people and building a strong culture that supports people to do their best work. We know DEI is a key ingredient of that recipe. Future IM/Pact helps us walk that talk by deepening the talent pool of great women working across our industry,” he said.

Future IM/Pact Founder Yolanda Beattie said momentum was clearly growing across the sector. “We’re seeing more superfunds and investment management firms recognise the importance of working across industry to build the pipeline of female investors,” she said.

“Having 20 industry partners on board gives us more opportunities to share with our growing pool of female talent, more mentors to support their career journey and more funding to inspire a passion among more women about a career in this hugely influential industry.”

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John Pearce

UniSuper, the $106 billion fund now open to all Australians, has today announced it has secured an investment relationship with Australia’s longest-established early-stage commercialisation fund manager – Uniseed.

Uniseed, like UniSuper, focuses on innovative programs that will change the world for the better. Established in 2000 and now owned by the Universities of Melbourne, Queensland, Sydney, New South Wales and the CSIRO, Uniseed provides seed funding for early-stage research and technology developed by its five partners. These innovative organisations provide around half of all patents created by research organisations in Australia.

UniSuper’s Chief Investment Officer John Pearce says that Uniseed was a natural fit and logical choice for the fund. “UniSuper has always championed Australia’s thinkers, creators and investigators. Uniseed is at the forefront of new start-ups and technologies,” Mr Pearce said. “This is an excellent opportunity for UniSuper to actively participate in the development and commercialisation of research and technology that will shape the future. We look forward to seeing this investment blossom and grow over time”.

Under the agreement, UniSuper has committed $75 million into Uniseed which will cover existing projects as well as exciting new developments across industries of the future, such as biotechnology, pharmaceuticals, quantum computing and green energy.

Uniseed’s Chief Executive Officer Peter Devine said that UniSuper’s investment will unlock more engagement with Australia’s growing innovation and start-up sector. “UniSuper is one of Australia’s largest and most respected and innovative super funds, and the capital at its disposal will go a long way to ensuring we can seize opportunities presented by the brilliant minds at Australia’s top research organisations,” Dr Devine said.

“This is a further step Uniseed is taking to facilitate commercialisation of Australian research. Today’s emergent start-ups are tomorrow’s tech and health giants, and with funding from UniSuper we are able to get in at the very early stages of these journeys.”

The investments will feed into UniSuper’s sustainable investment options.

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John Pearce

AMP Capital has announced it has signed a three-year agreement with renewable electricity retailer SmartestEnergy. The deal will see the AMP Capital managed component of UniSuper’s direct property portfolio become carbon neutral from 1 January 2022, eight years ahead of target.

As part of the agreement, a 10-hectare, community solar farm in Numurkah VIC, will link circa 6 gigawatt hours (the equivalent of the energy consumption of nearly 1,000 houses in NSW^[1]) to AMP Capital managed UniSuper assets including Dapto Mall, Marrickville Metro, 7 Macquarie Place and Malvern Shopping Centre. This solar farm is owned and operated by Providence Asset Group.

AMP Capital’s Head of Platform Operations and ESG Investing, Real Estate, Chris Nunn said the signing of this renewable power purchase agreement (PPA) marks a significant milestone in delivering on AMP Capital’s commitment to achieve long-term sustainable outcomes across the real estate assets we manage and support a renewable energy future.

“We are proud to be taking this step with UniSuper, a real estate owner who prioritises sustainability as much as we do. Working with our clients to deliver on their carbon neutral ambitions across their real estate portfolios is a key part of our sustainability strategy and importantly, aligns with the goals of our clients and their members who are focusing more than ever before on the sustainability of the assets in which they invest.”

This agreement is also in line with UniSuper’s overall net-zero emissions strategy, which could see it become one of the first super funds to achieve net-zero carbon across its entire direct real estate portfolio.

John Pearce, UniSuper’s Chief Investment Officer said, “We’re committed to being an environmental, social and governance (ESG) leader. UniSuper, and our members, are passionate about advocating for the rapid decarbonisation of our economy, and so we’re proud to achieve carbon-neutral status for [such a large part of] our direct real estate portfolio from 1 January 2022, eight years ahead of our initial target for this asset class.

“This renewable energy agreement demonstrates carbon-neutral portfolios can be achieved to maximise the sustainability of the portfolio without sacrificing investment returns for our members. We thank AMP for supporting our portfolio-wide commitment to net-zero with comprehensive actions to meet this ambitious target.”

As part of the agreement with SmartestEnergy, renewable energy certificates (LGCs) created by the Numurkah solar farm will be allocated to match 100% of the base building electricity consumption for UniSuper’s east coast assets, meaning that there are zero carbon emissions associated with the electricity consumed by the base building services, including the air conditioning and lifts.

Robert Owens, CEO, Australia for SmartestEnergy said, “It is excellent to work with forward-thinking and sustainably focused organisations such as UniSuper and AMP Capital. This agreement shows the demand for renewable energy in Australian business and we at SmartestEnergy aim to connect more companies to renewable generation, enabling their important steps towards Net Zero.”

As outlined in AMP Capital’s 2030 real estate sustainability strategy, AMP Capital has a Net Zero Carbon target for its entire managed real estate portfolio by 2030, covering Scope 1 and 2 emissions^[2]. The renewable energy procurement strategy is one of a number of initiatives aimed at achieving Net Zero Carbon across AMP Capital’s entire managed real estate portfolio by 2030.

According to Mr Nunn, buying renewable electricity is the most significant step owners and operators of real estate assets can take to rapidly reduce our carbon emissions. Renewable electricity contracts are now established and cost-effective for businesses with significant electricity demand. At AMP Capital, we’ve found that switching to renewable electricity has resulted in lower and more predictable energy costs, and that helps insulate our tenant customers from volatility in the electricity market.

Mr Nunn said, “The signing of this renewable electricity contract helps support the viability of new solar farms and provides a market signal that there is demand for more renewable electricity generation facilities to be built. The contract also supports clean energy jobs and the orderly transition away from fossil fuel dependence in Australia.

“We are proud to be able to show that a major commercial real estate portfolio can achieve zero net carbon in a cost-neutral way at a price that is less than what we’ve paid for traditional electricity, and that supporting renewables and combating climate change is not only the right thing to do for the environment but also cost-effective for our investors.”

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[1] According to the average NSW household usage in AER’s 2020 Residential Energy Consumption Benchmarks
[2] Scope 1 emissions are direct emissions from owned or controlled sources such as diesel generators, gas for heating and refrigerants. Scope 2 emissions are indirect emissions from the generation of purchased energy.
Scope 1 and 2 only. The renewable PPA for AMP Capital managed assets ensures 100% of the assets’ electricity load is balanced with renewable energy credits sourced from the solar farms. This strategy will take UniSuper’s scope 2 emissions to zero.

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John Pearce

Engagement with companies sees increased decarbonisation commitments and exposure to fossil fuel has been halved, according to UniSuper’s latest Climate Risk report.

UniSuper, the $100 billion superannuation fund, has made significant progress on its commitment to net-zero emissions, with 40 of its top 50 Australian investments setting Paris-aligned targets (up from 34 last year) and a further five committed to setting targets by the end of 2021.

Writing in the fourth edition of the annual UniSuper Climate Risk report^[1], Chief Investment Officer, John Pearce said UniSuper is actively managing its investments and operations to reduce carbon emissions in line with the Paris Agreement.

Mr Pearce said decarbonisation of the economy is one of the most significant investment themes for at least the next decade and that the corporate sector’s response to the challenges and opportunities of climate change is playing a major role in this.

“There is no doubt in my mind that the collective action of large investors like UniSuper has played a significant role in driving that behaviour. We strongly believe that engaging with companies and helping them progress toward these targets represents a more meaningful contribution to achieving the Paris goals than divestment – which effectively transfers fossil fuel exposures.”

The key updates revealed in the latest Climate Risk report include:

• 40 of the top 50 portfolio companies (up from 34 in 2019-20) have set operational targets to meet the Paris 2050 climate targets, and another five committed to setting targets this year
• across the entire portfolio, 66% of investments now have Paris-aligned targets (up from 51% 12 months ago)
• 0.4% of the fund is exposed to fossil fuel extraction, with overall fossil fuel exposure down to 2.55% from 5.05% last year
• 26% of the portfolio is, or will be, carbon neutral or net-zero by 2022 including the $2.6 billion direct unlisted property portfolio
• The fund’s operations achieved carbon neutral status in 2021.

Mr Pearce said the progress had been achieved by divesting some positions, eliminating holdings in companies that generate more than 10 per cent of revenue from mining thermal coal and not adding to existing positions as the portfolio has grown.

Across its diversified investment options UniSuper has also maintained carbon intensity at least a third below market benchmarks, while a shadow carbon price has been applied to the fund’s top 50 Australian holdings to highlight the pressure points in the portfolio.

UniSuper has seen strong demand for its three dedicated ESG investment options (designed to avoid companies involved in the production, generation, or transmission of coal, oil or gas) with over $12 billion in funds under management across these options, solidifying the fund’s position as Australia’s largest investor in ESG-themed strategies. The Global Environmental Opportunities (GEO) option, investing in companies who earn most of their revenue from providing environmental solutions, was the fund’s top performing option of the last financial year delivering returns of 48.9%.

Read the report.

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[1] UniSuper Climate Risk report

*Past performance is not an indicator of future performance.

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John Pearce

UniSuper, the $90 billion superannuation fund for the higher education and research sector, has surpassed $10 billion in funds under management across its three dedicated ESG investment options, solidifying its position as Australia’s largest investor in ESG-themed strategies.

The three ESG-themed strategies have delivered consistent returns and grown increasingly in popularity among UniSuper members over recent years:

• Sustainable High Growth, launched in 2000, has delivered 10.8% in the last year to 31 December and 10.6% p.a over 10 years.
• Sustainable Balanced, launched in 2007, has delivered 8.8% in the last year to 31 December and 9.0% p.a over 10 years.
• Global Environmental Opportunities, launched in 2012, has delivered 49.7% in the last year to 31 December and 17.5% p.a since inception.

UniSuper has a long-held commitment to actively incorporate ESG factors into all investment decisions. The dedicated ESG-themed strategies further expand on this commitment and are designed to avoid companies involved in the production, generation, or transmission of coal, oil or gas.

John Pearce, Chief Investment Officer at UniSuper said: “Surpassing $10 billion FUM across our ESG-themed strategies is a significant milestone. Excellent returns have obviously been a major contributing factor. The growth also reflects just how engaged our member base is, and the importance of ESG considerations in their investment choices.”

“Today, UniSuper is one of Australia’s leading superannuation funds in the space, our history in incorporating ESG factors into all investment decisions and alignment with the Paris Agreement speaks for itself,” Mr Pearce said.

UniSuper has committed to achieving net zero absolute carbon emissions in our investment portfolio by 2050, in alignment with the Paris Agreement.

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John Pearce

UniSuper, the $85 billion superannuation fund for the higher education and research sector, has instructed its custodian, BNP Paribas Securities Services, to suspend its stock lending program effective immediately.

UniSuper has instructed its custodian, BNP Paribas, to recall all shares currently out on loan, without exception.

UniSuper’s Chief Investment Officer, John Pearce said: “In a normally functioning market we’re comfortable lending our shares as we genuinely believe that it adds to market efficiency.

“The ability to short-sell adds to liquidity and price discovery in an orderly market. However, we are now in a market gripped by panic and we believe that restricting the ability to short-sell is in the best interest of promoting a more orderly market.”

Pearce added, “We are only one fund and the efficacy of our actions will depend on how many other funds follow a similar path. Of course, we are not privy to the thinking of other funds who lend their stock.”

The program will be suspended indefinitely.

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Several changes to the executive leadership team, including three newly created roles, will help to promote organisation-wide strategic alignment in how the business delivers great value to members through competitive returns, low fees and excellent service.

Commenting on the changes, CEO Kevin O’Sullivan said: “Given the abundance of change occurring within both the super and the higher education sectors, our new structure will better enable UniSuper to deliver the best possible retirement outcomes for our members. Our members’ best interests are at the heart of everything we do and this has been the key driver for making these changes”.

Anna Leibel, who has been leading the fund’s technology division since March 2017, has been appointed to a new role, Chief Technology & Delivery Officer, which will bring together an end-to-end back office function incorporating technology, program management and fund operations.

The roles of Chief Commercial Officer, responsible for fund strategy, product and marketing, and Chief Operating Officer, responsible for risk and governance, legal and finance have also been created and the fund is in the process of recruiting for these positions. Chief Investment Officer John Pearce remains in his role, as do Julie Watkins (People), Jack McCartney (Advice), and Lee Scales (Chief Customer Officer).

Tim Anderson, Executive Manager – Marketing & Product and Nick Drohan, Executive Manager – Program Management will be departing the fund in May.

“Tim and Nick have made exceptional contributions to the fund’s enviable position. I am enormously grateful for Tim’s work over the last eight years building our strong brand, award-winning product suite and digital strategy. And Nick has been instrumental in transforming the way we govern and manage our busy and complex project pipeline. I wish Tim and Nick all the best for the future and thank them for their significant support and contribution to our success,” said Kevin.

The new structure becomes effective during May.

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Penny Heard

UniSuper, the $70+ billion superannuation fund for Australia’s higher education and research sector, has appointed Penny Heard as Portfolio Manager within the Global Strategies and Quantitative team, further strengthening its in-house investment management capability.

Penny Heard brings over 15 years’ experience to the role, joining from JCP Investment Partners where she was a Senior Portfolio Manager and Research Analyst. Prior to this she held senior roles with Bank of America Merrill Lynch in Australia and Hong Kong.

UniSuper’s Chief Investment Officer John Pearce said of the appointment: “I’m pleased to welcome Penny to UniSuper. Her appointment adds to the considerable talent we have been able to attract from other funds and investment banks over recent years, which has enabled us to expand the scope of our in-house management activities”. Over 65% of the total Fund is now managed by UniSuper’s in-house teams.

Lou Capparelli

A separate development is the appointment of Lou Capparelli to the position of Manager, Sustainable Portfolios and Governance. Lou is a member of UniSuper’s Australian equities team with extensive experience in the Australian market, including senior roles at Blackrock and Evans and Partners.

Pearce said: “ESG teams are typically staffed by people who do not have direct portfolio management responsibilities, so Lou’s appointment places us in a relatively unique position in the industry. His appointment is testament to how committed we are to factoring environmental, social, and governance considerations into the investment process.”

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