While avoiding unsuitable companies and finding good investment opportunities in the leaders is our priority, our unique insights and company engagement also uncovers which companies have the capability to become future ESG leaders. Our investment experience facilitates the identification of the best opportunities as this transition takes shape.
Our proprietary Ethical Partners Operational Risk Assessment (EPORA) considers such issues as where a company does business, what products or services they sell, their human rights policies and their environmental impact. These are key considerations for us in addition to our strict assessment of a company’s balance sheet, cash flow and our assessment of company management. This analysis is conducted in-house via the use of over 600 different and diverse data sources. The EPORA is our screening and assessment process that results in the portfolio excluding companies unsuitable for an ethical portfolio, identifying companies that are leaders in ESG and indicates what changes can be made at the vast majority of other companies to improve ESG practices.
Once this analysis is complete, the crucial process of engagement with board, management and sustainability teams of companies begins, in which Ethical Partners actively leverages our shareholder voice to advocate for change. We have engaged with over 500 companies on over 300 ESG issues in the past year, and believe that this is integral to both our process and our ability to call for change in corporate Australia. We also collaborate and advocate for change in the wider legislative, NGO and shareholder community, as well as through shareholder voting.
Through this dynamic process of active management and stewardship of the capital we are privileged to manage, we believe that there is huge potential for positive change. Our approach to ESG can be summarised as:
- Avoiding the worst ESG performers
- Supporting the leaders (where valuation andthe financial case is appropriate)
- Advocating for large scale change and impact in the rest - the other 80% of the ASX market cap.
This information is intended for wholesale and institutional investors only.
The Responsible Investment Policy recognises that Ethical Partners Funds has an integral commitment to investing in a responsible, ethical and sustainable manner.
The Australian Modern Slavery Act 2018 requires entities based, or operating, in Australia which have an annual consolidated revenue of more than $100 million, to report annually on the risks of modern slavery in their operations and supply chains, and actions to address those risks. Other entities, based or operating in Australia may report voluntarily. We believe that if investors are demanding transparency, accountability, disclosure and attention to Modern Slavery within their operations, that we as investors must also be transparent and accountable as to how we address modern slavery ourselves.