Responsible Investment

Alphinity is committed to investing responsibly because we have found that environmental, social and governance (ESG) factors can have a material impact on both the risk and the returns of investments. We believe that companies with good ESG practices and processes have a better chance of outperforming over the long term as they are better placed to adapt to the changing world. Company engagement gives us an opportunity to create or preserve value by encouraging our investee companies to enhance their business practices, including those relating to ESG. Consequently, ESG risks and opportunities are integral to our investment process and are taken into account when considering and valuing the companies we invest in on our clients’ behalf.

Corporate responsibility: Alphinity has always integrated ESG considerations in its investment processes in order to better manage risk, and believes that in order to continue its success in long-term investing it needs to allocate capital to enterprises with sustainable business operations and practices. Long-term value creation is largely a result of the effective management of financial, physical and human capital so investment opportunities should be evaluated according to governance practices, including labour practices, health, safety and diversity; social practices including community engagement; and environmental practices, including the management of natural resource scarcity and exposure to climate change risks.

Engagement: We aim, wherever possible, to engage with the companies in which we have invested, as well as those we are considering investing, as we believe this is the most effective way to gain a detailed understanding of ESG risks and communicate expectations related to ESG to management. We record and track outcomes from all ESG engagement activities. This includes meetings with company Directors, meetings with CEOs and management where ESG is a focus of the meeting, and dedicated meetings with ESG specialists to discuss ESG risks in detail. The outcomes and insights gained through engagement inform our ESG risk assessment process and therefore our fundamental analysis of a company. As we see engagement as a key part of our investment process, we endeavour to have the relevant member of the investment team attend all meetings.

Transparency: Alphinity believes transparency is consistent with good governance and that it should display an appropriate degree of transparency around its investment activities, within the sensible boundaries of commercial sensitivity. Similarly, the companies in which it invests should also strive toward a reasonable level of transparency, also within the sensible boundaries of commercial sensitivity. Alphinity exercises proxy votes on all resolutions that go to company meetings. The most recent proxy reports can be found by following the links: Alphinity Global Equity Fund, Alphinity Australian Share Fund, Alphinity Concentrated Australian Share Fund, Alphinity Australian Equity Fund, Alphinity Global Sustainable Equity Fund and Alphinity Sustainable Share Fund. Recent portfolio holdings (as at 31 December 2023) can be found at the following links: Alphinity Australian Share Fund, Alphinity Concentrated Australian Share Fund, Alphinity Australian Equity Fund, Alphinity Sustainable Share Fund, Alphinity Global Equity Fund and Alphinity Global Sustainable Equity Fund.

Human rights: These are fundamental to a just society. Alphinity aims to promote and respect observance of basic human rights and freedoms and will encourage its investee companies to do the same. Alphinity was a signatory to the PRI engagement with the Australian Parliament which has resulted in the establishment of a Modern Slavery Act. Further information can be found in the Modern Slavery Factsheet.

Climate Change: Alphinity acknowledges the findings of the Intergovernmental Panel on Climate Change and supports the United Nation Paris Agreement to limit global warming to below 2°C. We believe that a global challenge such as this needs to be addressed by coordinated actions by all parties, including investors, private business, and particularly our own government. Anthropogenic climate change is a material social and economic threat and could, in some cases, present economic opportunities to investee companies. The actions of businesses and individuals can play a critical part in mitigating the impact of a changing climate. We therefore need to take into account the short, medium and long term impacts on companies’ earnings and valuations considering the material current and future climate change risks, including both threats and opportunities.

These threats and opportunities could be driven by the physical impacts of climate change (eg increased average temperatures) or by the transition to a low carbon economy (eg changes in global carbon policies). To enable greater transparency and clarity around risks to the financial markets and individual companies, we support and encourage disclosure in line with the recommendations of the Task Force on Climate Related Financial Disclosures (TCFD). Further information can be found in the Climate Change Statement.

Alphinity also manages the Alphinity Sustainable Share Fund and the Alphinity Global Sustainable Equity Fund, which invest in companies that we believe align with the United Nations Sustainable Development Goals. Further information can be found in the Sustainable Investing Factsheet.

Further details on Alphinity’s approach to ESG can be found in the ESG Policy.

Alphinity has been a signatory to the Principles for Responsible Investment since 2011 and has consistently been awarded high ratings by the Principles for Responsible Investment.

Click here for a link to the most recent report.

Supporting the quest to achieve gender balance in executive leadership across ASX200 companies by 2030

In November 2020, Alphinity signed up to industry super fund HESTA’s 40:40 Vision to increase the proportion of women in senior leadership across Australia’s largest listed companies to at least 40% by 2030. As a signatory, we commit to: actively engaging with companies on the gender diversity of their executive team; encouraging companies to sign on to the Vision to demonstrate their commitment; raising questions where there is evidence that companies are lagging behind targets and consider voting against the re-election Board or Committee members if companies are failing to demonstrate action on gender diversity aligned with long-term shareholder value. Find out more here.