Sustainable Funds

We invest in listed companies that support social priorities that offer attractive prospective 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 Charters. We apply the exact same disciplined investment philosophy of looking for earnings leadership in this focused sustainable investment universe.

Alphinity Sustainable Share Fund

A portfolio of Australian-listed companies that support one or more of the Sustainable Development Goals, have strong ESG practices and offer attractive prospective returns.
A committee of reputable external experts ensures the fund stays true to charter and drives active engagement with companies.
A proven investment team with strong track record applying a disciplined process.
Benchmark: S&P/ASX 300 Accumulation Index

Fund Flyer Sustainable Fund Charter

Alphinity Global Sustainable Equity Fund

A portfolio of leading global companies that support one or more of the Sustainable Development Goals, have strong ESG practices and offer attractive prospective returns.
A committee of reputable external experts ensures the fund stays true to charter and drives active engagement with companies.
A proven investment team with strong track record applying a disciplined process.
Benchmark: MSCI World Net Total Return Index (AUD)

Fund Flyer Global Sustainable Fund Charter

Latest Insights

15 Oct 2021

Alphinity ESG and Sustainability Report 2021

We are proud to present Alphinity’s first ESG and Sustainability Report. This report is an accumulation of the effort we have made in responsible investing across all our Funds for more than a decade.

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08 Oct 2021

Microsoft (MSFT US): Same but different

Microsoft is a business that has been the bedrock for how we get things done for decades. Trent Masters discuss the characteristics of the business that are contributing to the compelling investment case for shareholders.

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05 Oct 2021

7 valuable investing lessons from Mary Manning

In this Livewire video, Mary Manning discusses seven valuable lessons that investors can draw on in the current market environment, including the role of technology in the transition to a sustainable future, why it’s important to be aware of the risks, and why you should draw on those around you.

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05 Oct 2021

Untangling the complex world of ESG investing

In this video, Jessica Cairns discusses with Livewire Markets, Mia Kwok the difference between ESG and Sustainable Investing, different EGS frameworks and the United Nations Sustainable Development Goals (UNSDGs).

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01 Oct 2021

Tech for good – enabling sustainable business

Mary Manning discusses several stocks across different sectors, where technology is facilitating businesses to operate in a more sustainable way.

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23 Sep 2021

Pandora’s box: The ESG risks flying under the radar

In the first of three Livewire Expert Insights videos, Jessica Cairns talks about workforce structure – an ESG theme often missing from company management strategy documents.

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12 Aug 2021

The power of an active voice in Sustainable Investing

We believe that in order to be part of the solution towards long-term sustainable growth, one cannot do it silently.

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How we define ‘Doing Good’

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.

Where We Stand

Below we outline our views on several sectors typically avoided in ethical investing.

Fossil Fuels

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:

Climate change poses an existential challenge, a threat to human civilisation. The Paris Agreement aims to keep the increase in global average temperature to below 2°C above pre-industrial levels, and to pursue efforts to limit the increase to 1.5°C, which is believed to be a critical threshold beyond which the risk of self-reinforcing climate feedback loops rises significantly. The trajectory required to achieve this goal involves large absolute emissions declines in the 2020s, and net zero global emissions from mid-century onwards.
The Fund strives not to invest in companies whose activities are inconsistent with the achievement of the UN SDGs. Climate action is one of the SDGs and climate risk hampers the achievement of most, if not all, of the SDGs. Therefore, unabated fossil fuel production beyond the carbon budget implied by the Paris Agreement is incompatible with the achievement of the SDGs and with the Sustainable Share Fund Charter.
Our approach is aligned with global best practices of sustainable investing. EU Sustainable Finance Taxonomy has criticised investing in fossil fuels, including natural gas, as at best this is ‘less brown’ rather than green, and has issued specific guidelines to this effect.
Reducing greenhouse gas emissions of activities using fossil fuels to the point of carbon neutrality is affordable for humanity when the significant external costs of using fossil fuels, including climate risks, are taken into account. This can be achieved through substitution by low- and zero-carbon technologies such as solar and wind energy, electric vehicles and hydrogen, and deploying carbon capture and storage. As our analysis indicates, even where carbon-free solutions are more expensive than unabated fossil fuel-based ones, abating major sources of greenhouse gas emissions from fossil fuels increases the costs of final products only modestly, even though there might be a significant increase to the cost of inputs, and is unlikely to make end products unaffordable or hinder achievement of any SDGs, including those of ending poverty and hunger.

Addictions: Tobacco, Alcohol, Gambling

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 have a zero revenue tolerance for companies producing tobacco products. We do not invest in companies materially exposed to the operation, manufacture or packaging of products or substances that are likely to cause addiction.

Mining

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:

Iron Ore and Metallurgical Coal, which are required for Sustainable Infrastructure (SDG 9) and Sustainable Cities (SDG 11). Once enough scrap supply becomes available (particularly in emerging industrial societies such as China and India), we will favour steel production which makes steel from scrap using Electric Arc Furnaces (EAFs) which does not require metallurgical coal. We are also cognisant that lower emission steel making technologies are being assessed, which if proved scalable and practical on a commercial level could make the extraction of metallurgical coal largely redundant. Should this happen, we would then favour steel production from these technologies in addition to EAFs.
In the meantime, we will engage with the companies in which we’ve invested on how carbon emissions can be reduced in the steelmaking process.
Copper, Nickel, Aluminium and Lithium are essential raw materials to support Sustainable Infrastructure and Cities (SDG 9 and 11) but also Climate Change (SDG 13). Copper, for example, is required for Electric Vehicles and Batteries, Aluminium for wind farms.

We do not support the extraction of:

Gold, as its end uses do not support any of the Sustainable Development Goals, yet its extraction can cause significant damage to the environment, health and safety through its mining and the disposal of its tailings. Gold’s primary usage consists of jewellery making and storing wealth, neither of which add significant value to society. Less than 10% of gold production is destined for industrial use, this can easily be satisfied by gold which comes out as a by-product of more socially-necessary metals such as Copper.
Oil, Gas and Thermal Coal, as cleaner affordable alternatives such as renewables exist.

For more information see the Sustainable Share Fund Charter, Global Sustainable Equity Fund Charter and our extractive industries paper.

Animal Welfare

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.

Armaments

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.

Predatory Lending

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.

Banking

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).

Forest Products

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).

Human Rights

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.

Sustainable Share Fund Team

Stephane Andre

Portfolio Manager and Compliance Committee Member

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Bruce Smith

Portfolio Manager and Compliance Committee Member

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Jessica Cairns

ESG & Sustainability Manager

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Moana Nottage

ESG & Sustainability Analyst

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Elaine Prior

Compliance Committee Member

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Melissa Stewart

Compliance Committee Member

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Global Sustainable Equity Fund Team

Mary Manning

Portfolio Manager and Compliance Committee Member

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Jeff Thomson

Portfolio Manager and Compliance Committee Member

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Jessica Cairns

ESG & Sustainability Manager

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Moana Nottage

ESG & Sustainability Analyst

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Elaine Prior

Compliance Committee Member

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Melissa Stewart

Compliance Committee Member

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Compliance Committee

The Compliance Committee includes co-Portfolio Managers of the Fund 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

Performance

Alphinity Sustainable Share Fund –
Performance (after fees) as at 30 September 2021

	Quarter (%)	1 year (%)	3 years (% p.a.)	5 years (% p.a.)	7 years (% p.a.)	10 years (% p.a.)	Since inception (% p.a.)
Alphinity Sustainable Share Fund	2.7	32.7	13.0	13.8	11.5	13.0	11.1
S&P/ASX 300 Accumulation Index	1.8	30.9	9.9	10.5	9.3	10.8	9.2

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.

Fund Commentaries

Unit Prices

Cumulative Performance Charts

How to Invest

To find out more about the Alphinity Sustainable Share Fund or Alphinity Global Sustainable Equity 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:

Apply Now

Sustainable Share Fund PDS

Sustainable Share Fund TMD

Global Sustainable Equity Fund PDS

Global Sustainable Equity Fund TMD

Platforms

The Alphinity Sustainable Share Fund is also available on the ASX mFund platform.

Before making a decision about whether to make an investment or additional investment in one of our funds please read the Fund’s Target Market Determination (TMD), Product Disclosure Statement (PDS), Additional Information Booklet and Product Updates to ensure the key attributes of the Fund as described in the TMD and PDS aligns with your objectives, financial situation and needs.

Fund Characteristics

Fund	Alphinity Sustainable Share Fund	Alphinity Global Sustainable Equity Fund
Investment objective	To outperform the benchmark after costs over rolling five year periods	To outperform the benchmark after costs over rolling three year periods
Benchmark	S&P/ASX 300 Accumulation Index	MSCI World Net Total Return Index (AUD)
Stocks held in portfolio	35-55 stocks	25-40 stocks
Minimum investment timeframe	At least five years	At least five years
Minimum initial investment	$10,000 or $1,000 with Regular Savings Plan	$10,000 or $1,000 with Regular Savings Plan
Management fee	0.95% p.a.	1.00% p.a.
Performance fee	N/A	10% of the Fund’s return above the MSCI World Net Total Return Index (AUD)
Distribution frequency	Quarterly	Annually
APIR code	HOW0121AU	HOW1000AU
mFund ticker	ALH03	n/a

Investment Philosophy

Investment Process

Invest in a sustainable future

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Alphinity Sustainable Share Fund

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