Responsible investment

My name's Kirsten Simpson. I'm the Executive Director of Responsible Investment here at the Future Fund.

Being a responsible investor is not just about good risk management. It's also about the opportunity to build resilience and long-term returns into the portfolio.

At its heart, it's about delivering on the investment return mandate that we've been given by government. But to do that, we need to think about the complex investment landscape. We need to understand the spectrum of risk and opportunity. We need to think about the different scenarios and what the future might hold.

In terms of our journey, we've integrated environment, social and governance considerations into elements of our investment process since inception. When we did the deep thinking as part of the New Investment Order research though, we identified that the world is changing and it's changing rapidly. We know that as complexity increases, as stakeholder expectations change and evolve, so too must we. So, we have spent the last year working with the Board and the leadership team on our forward-looking, responsible investment agenda. That culminated in the development of a new Responsible Investment Belief and Policy, and they were both launched earlier this year. We now also have a multi-year program of work in place, which helps us bring these two really important governance developments to life through the portfolio.

The Belief itself clearly articulates that we believe that the integration of environment, social and governance considerations, including those of climate change, enhances long-term returns and our reputation.

This year, the Board approved a new Responsible Investment Policy, and it's got four key pillars; integration, stewardship, exclusions and collaboration. In our new policy, the Board has set some really clear responsible investment priorities. These were established through a really robust materiality process, which helped us to identify a number of issues that we consider as systemic, to have whole-of-portfolio impacts and potentially to impact on long-term returns.

In terms of our priorities, it's very much about ensuring that our systems and our processes help us to align the portfolio and what we do in the investment team day-to-day with the Board's new Investment Belief.

Ultimately our responsible investment approach is making sure that Australia's sovereign wealth is enduring, not just for today and tomorrow but for future generations to come.