CBUS SUPER TO INTEGRATE UN’S SUSTAINABLE DEVELOPMENT GOALS

In her new role as investment manager innovation and strategy at Cbus Super, former McKinsey & Company consultant Alexandra West wants to lift the $37 billion fund’s sustainability credentials, particularly within its flagship property portfolio.

The industry superannuation fund for construction workers previously employed West as a consultant, before bringing her in house in October 2016.

She reports to Cbus executive manager, investment strategy, Kristian Fok, who splits the chief investment officer role at the fund with executive manager, investment management, Trish Donohue.

In West’s previous role as an external consultant to the fund, she worked closely with top Cbus executives on the development of a new investment strategy, including a plan now being implemented to manage up to 20 per cent of assets in-house. This has included a run on new hires to the internal investment team.

The most recent hire was announced last week. Anthony Seabrook joined Cbus in the role of senior portfolio manager in the internal equities team, reporting to the head of the team, Kiran Singh.

Broader benefits for members

One of West’s first priorities is to research how Cbus can better align its investment expertise with the United Nations’ Sustainable Development Goals – targets to end poverty, protect the planet and promote prosperity.

The objective is to develop ways for the fund to return broader benefits to members – such as jobs and a sustainable economy – on top of investment returns. The obvious place to start integrating these goals is in the fund’s portfolio of assets in the built environment.

West sits on the Sustainable Development Goals advisory committee for the United Nations Principles for Responsible Investment (PRI), alongside Cbus chief executive David Atkin.

“Many rapidly growing funds at the moment are asking the question, ‘What should we do in house and what should we outsource?’ But we broadened the question to ask, ‘What sort of institutional investor ought we be to best deliver [for] our members’ retirement outcomes?’ ” West said.

The conclusion, she said, was to become a “truly long-term investor with a total portfolio perspective” that builds upon the investment expertise in the real economy and built environment.

Cbus has a successful track record of investments in the property space, generating strong returns and delivering jobs to its membership base.

“That is an example of a strategic approach to investing that supports our members,” West said. “It supports the broader fund objectives while always having outstanding risk-adjusted returns as a prime” goal, West said.

She explained that this was the impetus for the build-up of the infrastructure team, with a focus on domestic greenfield opportunities to complement what the property development arm was already doing.

West will also be looking into the development of structures for investing in affordable housing.

“But what we will be doing there is a little bit different. Now that we have our internal infrastructure team, we have more capacity to look to invest in equity, not just debt opportunities, so we’re looking to do innovative things in that space,” she said.

Diverse experience on the team

West is also interested in how water scarcity, food sustainability and demographics will affect portfolios, but added that it will be some time before the fund is able to tackle these issues and integrate appropriate responses – such as the inclusion of sustainable development goals – to help alleviate the long-term risk to the portfolio.

“We don’t have a huge internal research team, but we have lots of relationships with different sorts of stakeholders,” West said.

She is optimistic that by displaying best practice and building relationships with larger investment organisations, Cbus can “punch above its weight” on the world stage.

“We recognise that we are a small, Melbourne-based organisation, but there are certain things we can cover very well here from Australia,” West said. “We do think we can punch above our weight. The existing team and the people who have been brought in have a real diversity of experience. Most of us have international experience and international networks.”

A Harvard University alumnus, she hopes to convince that institution to collaborate on responsible investments.

West’s background includes experience with Fidelity Investments and McKinsey. She is a former Harvard University Menzies Scholar and strategic adviser to clients including the World Bank’s International Finance Corporation.

By Dan Purves, investment magazine.com