We invest in Australian listed companies that support social priorities without compromising investment returns. These companies ‘do good’ and ‘do it well’.
Our Sustainable Compliance Committee which includes two external highly reputable independent experts, ensures we stay true to our Charter. We apply the exact same disciplined investment philosophy of looking for earnings leadership in this focused sustainable investment universe.
The United Nations Sustainable Development Goals (SDGs) are a set of 17 goals that were adopted at a UN summit in September 2015 and officially came into force in January 2016. While the SDGs are not legally binding, governments are expected to establish national frameworks for the achievement of the 17 Goals. Over the next 15 years, with these new goals that universally apply to all, countries will mobilise efforts to end all forms of poverty, fight inequalities and tackle climate change, while ensuring that no one is left behind. Click here to find out more.
Below we outline our views on several sectors typically avoided in ethical investing.
We will not invest in fossil fuel producers unless they have clearly demonstrated commitment and traction to reduce their scope 1, scope 2 and scope 3 greenhouse gas emissions on a trajectory aligned with the Paris Agreement (such as Science-Based Targets). We take this position on thermal coal, oil and natural gas for the following reasons:
We don’t support addictions.
Addictions are a blight on many people in society, particularly the most vulnerable, creating financial, psychological and relationship damage. The main addictions we consider are alcohol, tobacco and gambling, although some prescription drugs are also becoming problematic. We do not invest in companies materially exposed to the operation, manufacture or packaging of products or substances that are likely to cause addiction.
We support only mining of materials that contribute to sustainable solutions.
We differentiate between raw materials based on whether they are part of the solution to create a more sustainable world (i.e. aligned with the UN SDGs) or not. If they are, we give particular consideration to the manner in which the raw material is extracted, i.e. the ESG aspects.
In light of this, we support the extraction of:
We do not support the extraction of:
We avoid unnecessary harm to animals.
Animals are sentient beings and we believe they should be treated well. In our interactions with animals, humans have a responsibility to minimise adverse outcomes and suffering.
Agriculture: Whilst we accept that animals are a source of food for many, we are against factory farming in which animals are kept in confinement with limited ability to move freely. We are also opposed to the live export of animals. We will consider the harm to animals and to the environment from large scale commercial animal agriculture when assessing companies operating in this area.
Health Care: We accept that there are situations where the development of medical and therapeutic devices that could save human lives by law need to be tested on animals. In these cases, we are willing to accept a degree of animal testing as long as these are conducted in compliance with the most stringent industry codes of practice, and that cruelty to the animal is avoided.
We don’t support them.
We don’t support companies that make any weapons that could harm humans, for whatever purpose that is, defence or offense.
We don’t support such practices.
We are opposed to predatory lending especially as it tends to exploit the lowest income portion of society, the marginal and the vulnerable. We consider predatory lenders to be those who provide loans which charge usurious interest rates, or dollar-amount fees on small, short term loans. However, we do not consider the vast majority of bank lending to be predatory.
We support it but are keeping a close eye on its practices.
Banking is an essential element of society. Banks provide many services, including finance that allows an individual to buy a house, companies to invest in projects, restaurants to sustain cash flows, and so on. Society would simply not grow and prosper without an effective banking sector. Its activities support SDG 1 (reduce poverty and provide access to financial services) and underpin the financing of companies that support the other goals.
We do however recognize that it is also essential that financial services be provided in a responsible and ethical manner. The 2018 Royal Commission highlighted many dark spots in the industry. We are carefully monitoring how the banks are responding to it and correcting their practices. We also take into account the extent to which a bank does, or does not, support activities excluded from the Fund Charter (e.g. Thermal Coal financing) and their adopting of best practise standard in assessing ESG risks in lending (e.g. The Equator Principles and the UN Guiding Principles on Business and Human Rights).
In one sense some forest products are a renewable resource: trees do re-grow and in doing so they absorb a considerable amount of CO2. Some types of forests however are precious and irreplaceable: old growth forests (OGF). With a rapidly-shrinking number of OGFs around the world, we will not invest in companies which log and use old growth forests. Plantation forests, on the other hand, have been established in order to be harvested, so we are willing to consider investing in companies that plant and harvest trees from sustainable plantations managed in strict compliance with international standards, e.g. Forest Stewardship Council (FSC) and Programme for the Endorsement of Forest Certification (PEFC).
We consider them to be a fundamental right.
The respect for and support of fundamental human rights are the building blocks of a prosperous, productive and participatory society. Alphinity strongly supports the principle of respecting Human Rights. We acknowledge that we are accountable for any human rights impacts of our own operations and that we have a responsibility to manage and mitigate any adverse impact we might cause.
We also acknowledge that as investors and fiduciaries, we have the opportunity to use our influence to improve the management of human rights in the companies in which we invest on behalf of our beneficiaries. Business value chains have become increasingly global and complex. Companies and their investors are exposed to risks stemming from the mismanagement and sometimes explicit exploitation of people who are workers, contractors, suppliers, host communities and consumers. In addition to the adverse impacts to the holders of those rights, there are also risks to investors. According to the UN Guiding Principles, to manage these risks companies should avoid causing, benefiting from (directly or indirectly), or contributing to adverse human rights impacts through their own business activities and address such impacts when they occur. They should also prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed directly to those impacts. Furthermore, they should seek to support the remediation of adverse human rights impacts within the business, supply chains or broader stakeholder groups.
The Alphinity Sustainable Share Fund Compliance Committee includes co-Portfolio Managers, Stephane Andre and Bruce Smith, and independent sustainability experts, Elaine Prior and Melissa Stewart.
The Committee’s role is to rigorously review the investable universe to ensure compliance with the Fund’s Charter; adjudicate on ‘grey areas’; refine the Charter and filters as the SDGs evolve; help identify areas of company engagement; and review the external service providers used.
Alphinity Sustainable Share Fund –
Performance (after fees) as at 30 September 2020
|Alphinity Sustainable Share Fund||2.7||-3.3||9.8||9.6||8.0||8.8||9.1|
|S&P/ASX 300 Accumulation Index||-0.1||-10.0||4.9||7.4||6.0||6.9||7.3|
Alphinity Sustainable Share Fund: the Funds changed investment manager and investment methodology on 12 July 2010, at which time Alphinity Investment Management commenced managing the Fund and started transitioning of the portfolios to a structure consistent with Alphinity’s investment philosophy. The transition was completed on 31 August 2010. Therefore, the inception date for the returns for the Funds is 1 September 2010.
For performance for previous periods please contact Fidante Partners Investor Services team on 13 51 53 (during Sydney business hours). Returns are calculated after fees have been deducted assuming reinvestment of distributions. No allowance is made for tax. Past performance is not a reliable indicator of future performance.
To find out more about the Alphinity Sustainable Share Fund, contact your local Fidante Partners Business Development Manager or call the Fidante Partners Adviser Services Team on 1800 195 853.
For step by step instructions on how to invest, visit the Apply Now page of our website:
The Alphinity Sustainable Share Fund is also available on the ASX mFund platform.
The Alphinity Sustainable Share Fund provides a diversified portfolio of Australian stocks listed on the ASX that have strong Environment, Social and Governance (ESG) characteristics and, where possible, contribute towards the advancement of the UN Sustainable Development Goals (SDG) agenda.
|Fund Name||Alphinity Sustainable Share Fund|
|Investment objective||To outperform the benchmark after costs and over rolling five year periods|
|Benchmark||S&P/ASX 300 Accumulation Index|
|Stocks held in the portfolio||35-55|
|Minimum investment timeframe||At least five years|
|Investment universe||The investment universe is comprised of stocks listed on the S&P/ASX 300. To be eligible for inclusion
in the Fund, companies must be in activities and operations compatible with the Fund’s Sustainable
Charter – specifically be in the top 60% of ESG performers, responding appropriately to any involvement
in major controversies and not have more than 10% of their revenue from producing or operating
business involved in certain socially harmful activities such as predatory lending or tobacco-related
|Minimum initial investment||$10,000 or $1,000 with Regular Savings Plan|
|Management fee||0.95% p.a.|
We have teamed up with Livewire Markets to bring you In Focus: Alphinity Sustainable Share Fund. In this short video, Portfolio Manager Stephane Andre discusses how we define the sustainable universe and identify opportunities for investment.
Click below to watch:
The Alphinity Sustainable Share Fund Co-Portfolio Managers share their insights on the three biggest shifts in responsible investing since 2010.
In this webinar, Fortescue Metals Group Ltd CEO, Elizabeth Gaines joins Alphinity to discuss Fortescue’s approach to sustainability.
Alphinity details their thoughts about the recent board decisions made by Rio following the Juukan Gorge destruction.
Andrey Mironenko and Jessica Cairns discuss the rationale regarding the recent decision to exclude oil and gas from the Alphinity Sustainable Share Fund.
In this Q&A, Livewire spoke with Stephane Andre about what attracted him to Fortescue Metals Group, and why he thinks more upgrades are incoming.
Alphinity reflects on Rio Tinto in light of the destruction of the Juukan Gorge
While we are certain that some mining is probably unethical, is that the case for all, or can it be done in a way that is not?