You may have noticed that we recently started using “better investments and a better world” to explain our vision. Other than being a catchy phrase, what does this mean to you as an investor?
We chose this expression to summarise who we are, how we do business, and why we exist as a social enterprise, as it encapsulates our focus on working together as ethical investors to make our world a better place.
It’s also our commitment to you as your ethical investment manager. We seek to provide you with better investments, investing for impact and in companies doing the right thing.
Reviewing how we’ve communicated this to you in the past, I acknowledge we haven’t always explained this in the most conversational – or clear – way. In this update I hope to change that. We want you as an investor not only to take comfort in how we invest your funds but also in the 30 plus years we’ve spent crafting and refining the ethical investment process.
Creating better investments starts with how we select and review companies within our investment universe. Some ethical investment managers only negatively screen, excluding companies from the selection process which operate in unethical industries. We take that further, also conducting positive screening where we actively search for companies in industries that have a positive impact.
Our investment team carries out extensive research on each company before it earns a place in our portfolios. We review its historical financial performance, as well as its future prospects and its expected contribution to a sustainable future. We also evaluate the conduct of companies. For example, if a company has practices that are causing harm – such as slave labour in its supply chain or unsatisfactory workplace health and safety practices – it will be ineligible for investment.
Our investment policy governs how much of the portfolios is invested in positive companies. This ensures we invest a minimum of 10 per cent of each of our equity portfolios in positive companies at all times. At the end of July, these included water, hygiene and energy technology and services provider Ecolab and biotech company CSL. At 31 July, positive holdings across our funds ranged from 13 to 26 per cent. To put this in context, only 13 per cent of stocks in the S&P/ASX 300 are considered positive by our criteria.
Taking an approach where companies are screened both negatively and positively and reviewed on multiple levels ensures your investments are making the world a better place.