Our sustainable investment philosophy
UWA's Investment Philosophy and Policy
The University of Western Australia (UWA) believes a sustainable investment approach is likely to create and preserve long-term investment capital as:
- Environmental, Social and Governance (ESG) factors can have a material impact on long-term risk and return outcomes;
- Climate change poses a systemic risk, given the potential financial impacts of the associated transition to a low-carbon economy and the physical impacts of different climate outcomes; and
- Stewardship (or active ownership) supports a stakeholder expectation to be good stewards of capital and assists the realisation of long-term shareholder value.
The University’s Investment Policy Statement (IPS) sets out UWA’s overall philosophy, commitment and methodology for addressing ESG factors within UWA’s Portfolio. Section 13 of the IPS outlines UWA’s ESG commitments, specifically to:
- Integrate ESG factors through the Implemented Consultant’s portfolio oversight of systemic risks linked to ESG, assessment of Investment Managers and active engagement with Investment Managers.
- Exercise its ownership rights, including company engagement and share voting in a manner consistent with active ownership and stewardship of the invested assets, via the Implemented Consultant.
- Assess climate change-related risks and opportunities in its investments and to manage them accordingly. The Implemented Consultant is expected to report on carbon metrics and reduction strategies, active ownership, investment in sustainability themes, and disclosure consistent with the Taskforce on Climate-related Financial Disclosures (TCFD). Objective is to assess the transition capacity of the underlying holdings in the portfolio.
- Assess and address modern slavery risk as part of the investment process via the Implemented Consultant and underlying Investment Managers, consistent with the Modern Slavery Act 2018 requirements.
- Restricts specified investments via the Implemented Consultant and monitor and respond to significant issues such as human rights abuses, labour rights abuses, severe environmental pollution and corrupt business practices.
Mercer's role as an Implemented Consultant for UWA
UWA has appointed Mercer Investments (Australia) Limited (MIAL) as its Implemented Consultant. An Implemented Consultant is a firm appointed to define, develop and deliver a client’s investment strategy. The Implemented Consultant’s scope of work can include investment governance, portfolio risk management, sustainability and diversification.
This Annual Sustainable Investment Review (Report) makes reference to UWA’s investments in certain Mercer Funds (UWA’s Portfolio or the UWA Portfolio). MIAL appoints and monitors specialist third-party investment managers (Investment Managers), who are responsible for making security and asset selection decisions in line with the investment objectives of the respective Mercer Funds. Each Mercer Fund’s offer document1 summarises the ESG technique/s applicable to that Mercer fund.
Where relevant and aligned with achieving the investment objective of the Mercer Funds, MIAL seeks to consider ESG factors in its investment process using some, or all, of the following techniques1. These are in turn applied to the UWA Portfolio to achieve the sustainable investment objectives set out in their IPS.
- Integration of ESG factors in relevant investment decisions by appointing Investment Managers who assess and reflect ESG risks and opportunities when they select investments and construct their portfolios.
- Stewardship, via engagement with Investment Managers, companies, and policymakers and/or via proxy voting at listed company annual general meetings. This can include both Mercer’s direct engagement with the abovementioned groups, such as Mercer’s monitoring of Investment Managers, or engagement that our Investment Managers undertake with companies on our behalf.
- Exclusions that seek to avoid investment in, or remove exposure as much as practicable to, certain companies or securities with involvement in defined products or business activities, as outlined within the Exclusions Criteria section of the Mercer Funds’ offer documents2
Mercer reports back to the UWA Investment Committee on the UWA Portfolio’s ESG performance and compliance with its IPS annually, through this report.
1The ESG techniques are applied where relevant to the asset classes and Mercer Funds in which UWA invests.
2Single Sector Funds | Mercer Funds
Mercer's Sustainable Investment Approach
Sustainable investment is a term used to describe a range of approaches to investments that give regard to how ESG factors and systemic trends may impact future investment outcomes.
Mercer’s ESG implementation process adopts four primary techniques (shown right), applied to varying extents in each relevant Mercer Fund (as per the offer documents), with more detail on stewardship provided in the MIAL Stewardship Policy1.
| Integration | Stewardship | Exclusions | Investment |
|---|---|---|---|
| Objective: Integration of ESG factors in relevant investment decisions by appointing Investment Managers who assess and reflect ESG risks and opportunities when they select investments and construct their portfolios. |
Objective: Stewardship, via engagement with Investment Managers, companies, and policymakers and/or via proxy voting at listed company annual general meetings. This can include both Mercer’s direct engagement with the abovementioned groups, such as Mercer’s monitoring of Investment Managers, or engagement that our Investment Managers undertake with companies on our behalf. |
Objective: Seek to avoid investment in, or remove exposure as much as practicable to, certain companies or securities with involvement in defined products or business activities, as outlined within the Exclusions Criteria section of the Mercer Funds’ offer documents2. |
Objective: Investment in sustainability themes, which is only applicable to our Sustainable Funds. |
| Disclosure: Voluntary and mandated reporting | |||
Key takeaways
The UWA Portfolio’s performance across key ESG metrics monitored, as at 31 December 2025:
- Peer relative positioning: an ‘A’ rating (with a score of 71%) under Mercer’s peer benchmarking assessment, reflecting the University’s continued commitment to Sustainable Investment
- Integration: 100% of UWA’s Portfolio where ESG is integrated where relevant
- Carbon footprint: 93.6 tCO2e per $M FUM, a 33.0% reduction vs. 2020 baseline assessment
- Impact contribution: net Sustainable Development Goals (SDG) score of 0.8 (benchmark 0.7), showing a modestly positive aggregate contribution
- Proxy voting: managers voted at 99.7% of votable meetings (3,790 meetings; 44,982 proposals)
- Modern slavery: 0% modern slavery red-flag exposure.
Further detail on the assessment areas highlighted above are contained within the following sections.
UWA's Portfolio ESG Metrics Summary
93.6
Totalcarbon footprint (tCo2e per $M FUM) - a 33% reduction from a 2020 baseline
0.8
Totalimpact SDG score vs. 0.7 benchmark score
Compliant
with the screening requirements outlined in UWA’s Investment Policy
99.7%
Meetings voted by our Investment Managers globally
Further detail on the assessment areas highlighted above are contained within the following sections.
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Peer Relative Positioning
Mercer’s Responsible Investment Total Evaluation (RITE) assessment, conducted through a structured survey of asset owners, is an evaluation that can be monitored over time and can provide peer-relative insights to help drive improvement. The assessment considers the extent to which asset owners are currently integrating ESG considerations into investment decision making.
UWA rated ‘A’ (with a score of 71%) on the RITE assessment. An ‘A’ rating is awarded to peers who have achieved between 61-75% of points for ESG integration across the four areas of Beliefs, Policy, Process and Portfolio. UWA’s score is within the upper quartile of Mercer’s global peer group of asset owners and within its size cohort, reflecting the University’s continued commitment to Sustainable Investment.
Source: Mercer
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ESG Integration
The asset management industry has evolved and the integration of ESG factors into investments is now appearing to be more mainstream. As part of this evolution, a new ESG integration framework has been introduced into Mercer’s Investment Manager research process.
The new ESG integration framework assesses the extent to which financially material ESG factors are integrated into investment decision making by Investment Managers, focused on two components:
- ESG relevance – this indicator highlights the degree to which ESG factors have the potential to influence Mercer’s research view of investment strategies in a particular asset class, based on the potential impact of ESG factors on the underlying securities and as risk-return drivers. Categories include High, Medium, Low and Out of Scope.
- ESG indication – where relevant, each investment strategy is assigned an ESG indication. ESG is considered Integrated into an investment strategy if Mercer believes there is consistency and repeatability in the Investment Manager’s approach to assessing financially material ESG risks in their investment process. Where this cannot be evidenced, ESG is considered Not Integrated.
As shown in the chart below, all investment strategies within the UWA Portfolio integrate ESG where it is relevant.
Source: Mercer
ESG relevance
High: E.g. Majority of Equities, Investment Grade Credit, Private Markets
Medium: E.g. Systematic Equities, Long-Short Equities, Sub-IG Credit, EM Debt, Multi-Asset Strategies, Private Markets
Low: E.g. Sovereign Bonds, Cash/Enhanced Cash, Securitized Credit, Commodities, Hedge Funds/Systematic Macro
Out of scope: E.g. Passive strategies
1Defined as sub-asset classes assigned High or Medium ESG relevance
2The Mercer manager research universe weighted by the asset classes which UWA are invested in -
Emissions tracking
Mercer uses carbon footprint1 asa metric to measure and report on overall portfolio emissions and reductions over time.
How this translates into emissions reduction for UWA’s Portfolio is illustrated in the chart2 below. The Mercer Funds in which UWA are invested have decarbonised by 33.0% on an Absolute Emissions/$M invested basis against a 2020 baseline.
Source: MSCI ESG Manager
Notes:
1Carbon footprint is defined as absolute carbon emissions per $M of FUM, and covers Scope 1&2 emissions.
2This chart reflects the emissions reduction of the UWA Portfolio. -
Climate transition
The Analytics for Climate Transition (ACT) tool is a forward-looking assessment of climate transition risk and opportunity within an investment portfolio. This analysis helps MIAL prioritise emissions reductions across its assets under management, guide Investment Manager and company engagement efforts, and identify climate transition aligned opportunities.
The chart below shows that the majority of UWA’s overall Portfolio is categorised positively1 for transition capacity.
Source: Mercer, MSCI ESG and ISS ESG
1Mercer considers ACT categories outside the ‘grey’ categories to be in the process of transition.
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Sustainable development goals
The UN Sustainable Development Goals (SDGs) alignment analysis1 assesses the UWA Portfolio’s impact on the SDGs. Measuring this impact helps identify (through alignment of business revenue and operational conduct) those investments that are contributing to, or obstructing, the transformation which seeks to achieve these social and environmental objectives.
UWA’s Portfolio has a modestly positive result overall and is marginally better than the benchmark, with a portfolio net impact score of 0.8 (vs. 0.7 for the benchmark). The UWA Portfolio has positive impact scores across all social objectives. The portfolio is notably more aligned vs. the aggregate benchmark in SDG 3 (Good Health & Wellbeing). The Portfolio’s impact score is more muted across environmental objectives however still exceeds the aggregate benchmark. Notably, the UWA Portfolio is more strongly aligned than the benchmark in SDG 7 (Affordable and Clean Energy).
Source: ISS ESG
1This analysis only includes Mercer Funds in listed asset classes
2The SDG Impact Rating uses numeric scores to indicate a company’s impact, presented on a scale from -10 (significant negative impact) to +10 (significant positive impact)
3The ‘benchmark’ refers to the relevant market indices for the asset classes which UWA are invested in -
Proxy voting
Proxy Voting Summary
As a shareholder of publicly listed companies, MIAL has the right to vote at shareholder meetings. MIAL delegates proxy voting responsibility to its listed equity Investment Managers. Below summarises the 2025 proxy voting activity for the Mercer Funds, for both domestic and global equities holdings:
Company Name Proposal Priority Vote Rationale Woodside Energy Group Ltd #3. Remuneration Report FOR Concerns raised about high executive remuneration despite poor shareholder experience; however, insufficient conviction to warrant an Against Vote at this AGM. Origin Energy #11. Adoption of the 2025 Climate Transition Action Plan FOR Progress toward targets is solid, with planned Eraring closure a key factor in achieving 2030 emissions target. No significant concerns with transition strategy or existing disclosures. Westpac Banking Corp #5B. SHP Regarding Customer Climate Transition Plans and Alignment with the Paris Agreement AGAINST Robust process for assessing lending to carbon-intensive customers; additional disclosure requested by the resolution was deemed unnecessary. Macquarie Group Limited #5B. Climate Risk Exposure and Management Disclosures AGAINST Plans are in place to enhance disclosure in the next tranche of Sustainability Report, aligned with mandatory climate reporting requirements, which should address much of the proposal’s requests. National Australia Bank Limited #5C. SHP Regarding Strategy to Eliminate Financed Deforestation AGAINST Practical and evolving approach to managing deforestation risk, including stakeholder engagement; additional disclosure requested was unnecessary. Source: Broadridge plus Mercer *SHP – Shareholder Proposal
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Investment Manager Engagement Survey and Collaborative Engagement
Investment Manager Engagement Survey results
Mercer conducts an Investment Manager Engagement Survey with all appointed Investment Managers globally to monitor developments and support our engagement program.
The 2025 survey had a ~99% response rate1 in the Pacific*.
98% of respondents have an SI/RI/ESG Policy.
Some other results include:
- 91% were awarded 4 or 5 stars by the Principles for Responsible Investment (PRI)2 at the latest review for asset class results
- 98% have prepared a climate change reporting practices
- 72% consider biodiversity and natural capital risks in investment decisions
- 78% ofstrategies assess physical risk considerations
- 36% have engaged over the past 12 months specifically on Indigenous peoples with a portfolio holding held in the strategy
- 26% have set climate targets for their investment strategies and a further 9% plan to within 12 months
- 79% assess and monitor cyber security risks relating to holdings.
Collaborative engagement activity
Mercer are involved in multiple collaborative initiatives driving improvements viewed to benefit portfolios. Example initiatives and outcomes include:
- Investor Group on Climate Change (IGCC)3: Mercer contributed to IGCC submissionson sustainable finance strategy and mandatory climate disclosures. Policy engagement and researchfeeds into ourstewardshipprogram and multiple beneficial reports and meetings.
- Climate Action 100+ (CA100+)4: Mercer co-leads engagement for Wesfarmers, and participates in CA100+ engagements with BHP, Rio Tinto, Santos, Woodside, AGL and Origin.
- Responsible Investment Association Australasia (RIAA)5: continued participating in First Nations Working Group and Human Rights Working Group. In addition, Arti Prasad, Head of Sustainable Investment at Mercer, serves on the RIAA Board.
- The Australian Sustainable Finance Institute (ASFI)6: Mercer has provided consultation input to a number of ASFI initiatives, such as the Sustainable Finance Taxonomy, amongst other sustainable finance strategy elements.
- Circular Australia: Mercer co-chairs the Finance & Investment Taskforce and co-authored key reports launched in November 2025.
- Investors Against Slavery & Trafficking (APAC)7: Mercer has been active in working groups on policy and industry advocacy and company engagements.
1Responses are by strategy, with Pacific responses for 252 strategies and 108 Investment Managers, across public and private markets. We worked with Dasseti's survey database in collaboration with other Mercer regions.
2https://www.unpri.org/
3https://igcc.org.au/
4https://www.climateaction100.org/
5https://www.responsibleinvestment.org/
6https://www.asfi.org.au/publications/australian-framing-paper-designing-australias-sustainable-finance-taxonomy-final-paper
7https://www.iastapac.org/ -
Modern Slavery
UWA’s Modern Slavery Statement details the efforts made by the University over recent years to understand, and where possible, reduce the risks of modern slavery in all its activities.
Mercer’s sustainable investment approach has included consideration of modern slavery as an important human rights issue for many years, as outlined in our Modern Slavery Statement. This includes assessing and addressing modern slavery risk alongside other key ESG risks, through portfolio assessments, Investment Manager engagements and industry collaborative initiatives.
The latest screening assessment found no verified high severity modern slavery red flags relevant to UWA’s Portfolio.