Simply believing there is a “better way” of doing things is not enough to bring that “better way” about. Actually creating positive change requires hard work to break through multiple technical and behavioral barriers. So where to start? Ever the master of simplifying complex management problems, Peter Drucker proposed his Wagon Train theory: find out what makes the lead wagons crossing the prairies go faster and share these findings with the follow-on wagons.

Australia’s Construction and Building Unions Superannuation Fund (CBUS) qualifies as a lead wagon in Integrated Reporting by virtue of deciding to adopt the framework four years ago. Founded in 1984, CBUS is one of Australia’s largest industry super funds with (as of mid-2018) 778,000 members, 136,000 employers, and AUS$47 billion in assets. With an average member age of 39, it is a relatively young fund with significant growth potential in the years ahead.

How does CEO David Atkin view the CBUS decision to adopt four years ago? He ends his comments in the 2018 annual report with these words: “Finally, it is important to acknowledge that provides a useful framework to articulate our business model. Now, in our fourth integrated reporting cycle, we are reaping the benefits of a deeper alignment of our business planning with it” (CBUS, 2018, p. 7).

Following the structure of the Framework, the rest of this chapter summarizes the CBUS value-creation story in six parts: (1) organizational overview, capital resources, and value-creation, (2) governance, (3) business model, (4) performance, (5) risks and opportunities, (6) strategy, resource allocation, and outlook.

Organizational overview, capital resources, and value-creation

An outline of the CBUS organization has already been provided above. The organization deploys six types of capital to create stakeholder value: (1) financial (accumulated retirement savings), (2) manufactured (real estate, IT equipment), (3) human (its people), (4) intellectual (economic, financial, actuarial models), (5) social/relationships (its business and personal networks), (6) natural (land, water, air).

CBUS uses these capitals to address the four desires that it has found matter most to its members and their employers:

  • 1. having enough income in retirement;
  • 2. Looking out for our interests;
  • 3. investing responsibly and sustainably;
  • 4. continuing to manage CBUS as a strong, reliable, innovative organization.

To meet these stakeholder needs, the organization will create value in six specific ways:

  • 1. Design and implement member product and services that meet their expressed needs.
  • 2. Provide advice and assistance to members.
  • 3. Provide advice and solutions to employers.
  • 4. Advocate member and employer interests.
  • 5. Evaluate and manage business partner relationships.
  • 6. Support the UN’s 17 SDGs.

The 2018 annual report tells the story of how CBUS uses its six types of capital to achieve these value-creating goals. Here is a summary of that story.


The report opens with this statement from the 16-member CBUS board: "Our Board has acknowledged that our Report follows the Integrated Reporting Framework, which allows us to tell our members and other stakeholders how we create value for them” (Construction and Building Unions Superannuation Fund (CBUS), 2018, p. 2). From there it profiles the board in five dimensions: tenure, gender, age, hours of training, and skills/experience. For example, the distribution of board skills/experience is legal - 19%, building/construction -28%, finance/investment - 19%, property - 16%, and public policy - 19%. The five standing committees are investment, audit and risk, people, member/ employer sendees, and nomination. The performance of these committees and the board as a whole is evaluated on a regular basis with the assistance of an outside third party. There are clear policies on conflicts of interest and board remuneration, gender, and tenure.

The board oversees the development and implementation of the CBUS strategic plan. It sharpens its strategic focus through offsite meetings that cover topics such as retirement readiness and the impacts of changing demographics and technolog)' on the organization and its stakeholders. The board is expanding the responsibilities of its people committee to delve more deeply into and support organizational priorities such as strengthening culture and updating remuneration policy. The investment committee is overseeing the implementation of a new investment model, which includes enhancing the integration of ESG considerations into the investment decision framework.

Business model

To meet the expressed needs and wants of its member and their employers, the CBUS business model has two key components:

  • 1. Advice/administration services component: provides retirement-related information, advice, and assistance to members and their employers, and advocates on their behalf. Key elements of this structure include active member engagement and feedback mechanisms, an expanding digital presence (e.g., video account statements, retirement income estimates), a relevant array of insurance products, and a comprehensive employer engagement, support, and advocacy program.
  • 2. Investment decision-making component: generates competitive, sustainable net long-term returns within pre-established risk budgets. Key elements of this structure are taking an integrative total portfolio perspective, innovating through sourcing investments through multiple channels, direct investing, insourcing, and rigorous due diligence processes including such ESG considerations as carbon emissions, sustainable supply chains, gender and cultural diversity, and labor rights, health, and safety.

The report contains a special section titled “Our Approach to Responsible Investing,” which explains the CBUS fundamental belief of IR’s importance to delivering long-term value for its members who work (or have worked) in the building and construction industries. Explicit reference is made to using the UN’s 17 SDGs as criteria for creating a global quality equities strategy, as well as to inform the CBUS voting and engagement intentions. An investment example was Bright Energy (a wind and solar renewable energy company). Two engagement examples were Commonwealth Bank of Australia (money laundering and cultural issues) and Rio Tinto (lack of climate-related disclosures). CBUS believes the “S” in ESG is best tackled through collective action organizations such as the Responsible Investment Association of Australia and the global Workforce Disclosure Initiative.


The two business model components each have their own performance metrics:

  • 1. Advice/administration services component: member satisfaction rating is 86%. Average active member balance is $57,000. Proportion of active members with adequate savings levels is 70%. Proportion of members retained with an income stream account after retirement is 80%. Average income stream member account is $277,000. A project to understand income stream member behavior and sustainability of income in retirement is under way.7 On the employer side, the satisfaction rating is 92%. Projects to maintain high employer satisfaction ratings and attract new employers are under way. There is a detailed scorecard listing actual member and employer experience metrics vs. targets.
  • 2. Investment decision-making component: the ten-year net return on the CBUS default investment option was 7.2% vs. 6.4% for the median industry fund and 5.3% for the median retail fund.8 Longer and shorter evaluation periods produced similar results. These results were achieved with a below-median equity portfolio carbon footprint (280 vs. 290) and a property portfolio sustainability GRESB9 score of 97/100, which is 3rd out of 874 global rankings. The report also provides more qualitative performance assessments on SDGs related to gender equality, renewable energy, sustainable infrastructure, and participating in collective national and international ESG/SDG-related initiatives.
CBUS risks and opportunities matrix

FIGURE 15.1 CBUS risks and opportunities matrix

CBUS also measures and reports on progress in improving internal business functions such as governance, people management, IT, and finance.

Risks and opportunities

CBUS sees future demographic, political, economic, and environmental developments embodying both risks and opportunities for the organization. Its Report sets out a risks/opportunities matrix as an organizing framework. Figure 15.1 represents a simplified version of it.

The report provides a detailed strategy matrix setting out CBUS future goals and the plans to achieve them. A key strategy philosophy is to seek out opportunities that (a) will enhance meeting member and employer needs, organization growth/sustainability, and brand/reputation, and (b) to mitigate the risks that would negatively impact these three organizational goals.

Strategy, resource allocation, and outlook

Looking ahead, the report makes two assertions: “CBUS will win [...] 1. By looking after its members and employers better than anyone else, and 2. By being an innovative, long-term, patient investor with a proven track record of superior outcomes” (CBUS, 2018, p. 50). To that end, it will achieve these four goals over the next two years:

  • 1. Increase active member engagement: raise the proportion of members at adequate retirement savings levels materially above the current 70%.
  • 2. Increase retiring member engagement: raise the proportion of retiring members that stay with the fund through the income stream option materially above the current 80%.
  • 3. Increase employer engagement: raise the proportion of industry employers who have chosen CBUS as the super provider for their employees materially above the current 50%.
  • 4. Provide superior investment results: by moving in-house investing to 25% of assets, reducing investment costs by 0.15% of assets, continuing to develop our sustainable investment capabilities, and continuing to produce first quartile investment returns.

The report lays out detailed strategies for each of these four goals. The strategies to achieve Goal 4 (produce superior investment results) include enhancing the new investment model on both technical and talent fronts, enhancing the direct investing program (especially in real estate), reducing agency and other friction costs, and creating a climate change roadmap.


Can you imagine a world where all asset owners tell their value-creating stories using the Framework? While none will match the CBUS narrative exactly, all would have important commonalities. All would explain why they exist, how they are governed, their business model for sustainable investing, their results, how they see their prospective risks and opportunities, and what they will do to produce even more sustainable value tomorrow. Is your asset owner organization prepared to join CBUS as a lead wagon on this journey?


  • 1 The NY State Expert Panel’s report’s six authors came together in early 2018 with diverse sets of expertise, work backgrounds, and viewpoints. Their initial mandate was to address the relatively narrow “divestment vs. engagement” issue in a climate change context. As they began to work together, two things happened. First, they realized their report should go well beyond the divest-ment/engagement issue. Second, what initially appeared to be six differing perspectives eventually integrated into a broad consensus on not only the issues the report should address, but also on the recommendations how to address them.
  • 2 As an example of an asset management organization transitioning to sustainable investing, the panel cites a report by BNP Paribas Asset Management titled "Global Sustainability Strategy.”
  • 3 This dictum was the basis of Marshall McLuhan’s (1964) book Understanding Media.
  • 4 A recent study by Maastricht University Professor Rob Bauer et al. titled "Get Real!” indicated the majority of members of a Dutch pension plan favored the explicit use of sustainable investment practices in managing the plan’s financial assets.
  • 5 A recent study by Harvard University Professor George Serafeim titled “Public Sentiment and the Price of Corporate Sustainability” shows that sustainability rankings are increasingly reflected in stock prices, unless overshadowed by negative short-term market sentiment (see Serafeim, 2018). The implication is that to be useful, equity valuation models need to be regularly updated to reflect changing investor behavior.
  • 6 With some modifications, the framework can be equally effectively used by asset management organizations.
  • 7 Given the number one wish of CBUS members is “to have enough income in retirement,” this is an important project.
  • 8 CBUS could expand its performance benchmarking activities by comparing a suite of performance metrics vs. those of its national and international peers as it currently does with its property portfolio.
  • 9 GRESB stands for Global Real Estate Sustainability Benchmark.


Construction and Building Unions Superannuation Fund (CBUS). (2018). CBUS 2018 Integrated Report: "Built for All of Us”. Available at: www.cbussuper.com.au/content/dam/cbus/files/gov-ernance/reporting/Annual-Integrated-Report-2018.pdf (Accessed: 15 January 2020).

Decarbonization Advisory Panel. (2019). Decarbonization Advisory Panel Beliefs and Recommendations. Available at: www.osc.state.ny.us/reports/decarbonization-advisory-pan-el-report.pdf (Accessed: 15 January 2020).

Government of Canada. (2019). Final Report of the Expert Panel on Sustainable Finance. Available at: http://publications.gc.ca/collections/collection_2019/eccc/En4-350-2-2019-eng.pdf (Accessed: 15 January 2020).

International Integrated Reporting Council (IIRC). (2013). Integrated Reporting Framework. Available at: https://integratedreporting.org/wp-content/uploads/2013/12/13-12-08-THE-IN-TERNATIONAL-IR-FRAMEWORK-2-l.pdf (Accessed: 15 January 2020).

Krosinsky, C. (2019). NY State's commons climate plan. Available at: www.top1000funds.com/2019/04/ ny-state-commons-climate-plan/ (Accessed: 15 January 2020).

Martin, R. (2007). The Opposable Mind. Cambridge, MA: Harvard Business School Press.

McLuhan, M. (1964). Understanding iMedia. New York: Mentor.

Serafeim, G. (2018). Public Sentiment and the Price of Corporate Sustainability. Available at: www.hbs. edu/faculty/Pages/item.aspx?num=55162 (Accessed: 15 January 2020).

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