ESG Approach

Ethical and sustainable investing is evolving to not just consider the minority of companies that are either
the best or worst at ESG but to understand which companies are best placed to improve their sustainability.

While avoiding unsuitable companies and finding good investment opportunities in the leaders is our priority, our company engagement and investment process (via the EPORA) also helps identify which companies have the capability to become future ESG leaders.

Our proprietary Ethical Partners Opportunity and 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 Ethical Partners Australian Share Fund ("the Fund") has also adopted a Net Zero Emissions by 2050 target. We will transition the Fund via the Ethical Partners Carbon Alignment Process (EPCAP). This is our proprietary process whereby we track carbon emissions by company, have a record of a company's emissions reduction targets and gain an understanding from a portfolio perspective of what changes may be needed over time to reduce carbon emissions.

The EPORA is our assessment process that results in the exclusion of companies unsuitable for investment in the Ethical Partners Australian Share Fund if they are deemed high risk, the identification of companies that are leaders in ESG and indicates what changes can be advocated for at the vast majority of other companies in order to improve ESG practices.

Once this analysis is complete, the important process of engagement with board, management and sustainability teams of companies begins, in which Ethical Partners actively advocates for change. We aim to proactively engage with companies on relevant ESG issues identified through the EPORA. We also collaborate and advocate for change in the wider legislative, NGO and shareholder community, as well as through shareholder voting. 

Our approach to ESG can be summarised as: 

-  Avoiding the worst ESG performers (excluded from the Ethical Partners Australian Share Fund investment universe). These companies are deemed high risk from a human rights perspective, in areas of governance and environmental performance.  This is a qualitative process determined in-house.

 - Owning shares in the ESG leaders (where valuation and the financial case is appropriate). ESG leaders are identified as "low risk" in many of the ESG assessment categories in the EPORA. This is a qualitative process determined in-house.

 - Advocating for change in many of the balance of companies that are not excluded or are not ESG leaders. Details of our engagement efforts are outlined in our Engagement Report available on this website.

For each company under coverage Ethical Partners, via its proprietary approach, assesses each category under the EPORA and assigns a low, medium or high-risk rating. A company that is assigned a high-risk rating in any EPORA category cannot be owned by the Fund (ie is excluded). These risk ratings are frequently reassessed as information becomes available to Ethical Partners changes.

As an initial negative screen, the Ethical Partners Australian Share Fund will exclude:

- Companies that have first derivative exposure to alcohol, gambling,  tobacco, uranium, weapons, predatory lending and fossil fuels.  

Ethical Partners defines a first derivative exposure as:

-        Direct and/or owned operations in the gambling industry

-        Direct or owned primary  production or sale of alcohol.

-        Direct or  owned primary production or sale of uranium.

-        Direct or owned primary  production or sale of weapons.

-        Direct or provided  predatory lending.

-        Direct or owned primary extraction and sale of fossil fuel. 

We define the threshold on these exclusions as a company having >1% of their net profit after tax (or an equivalent disclosed  measure) generated in these areas. Typically it will be zero.

We note that  the Fund may own companies with  what we define as having second derivative exposures to these exclusions  listed above.

For example, the Fund may own  a company that produces agricultural commodities or containers used by the alcohol supply  chain, or a REIT that has an alcohol retailer within their shopping centre or a carton and box manufacturer that a tobacco manufacturer may utilise. We  also note that the Fund is likely to hold a second derivative exposure to companies  who still utilise some fossil fuels in the course of their normal business  activities. We may also hold a bank that is on the pathway to  decarbonisation, but at this point retains some fossil fuel loan exposures. We  also note that these second derivative company exposures will further form an  important factor in the EPORA risk and opportunity analysis and investment  screening, and engagements with these companies wherever possible.

The Fund is transparent that  this is a realistic requirement in order to build a diverse portfolio of companies across the Australian share market while still being true to label  regarding exclusions.  

Geographic risk

The EPORA screen will also exclude all companies that have substantive operations in higher risk geographies (defined as those that rank in the bottom 30% of Transparency International’s Corruption Perceptions Index). This is defined  as a company having >15% of their net profit after tax (or an equivalent disclosed measure) generated in these areas. Typically, it will be zero.


  • The Investor Group on Climate Change Policy and Advocacy Working Group and the Transition to Zero Carbon Working Group.
  • The Net Zero Asset Manager Initiative.
  • Global Investor Statement to Governments on Climate Change.
  • Investor Alliance for Human Rights
  • Investor Statement on Corporate Accountability for Digital Rights
  • TCFD Supporter
  • Action Pledge to end Child Labour
  • Investor Statement in Support of the maintenance and expansion of the Bangladesh Accord
  • Signatory to the Investor Statement of solidarity to address systemic racism and call to action
  • Joined the Signatory to the 40:40 Vision for achieving gender balance in executive leadership
  • Signatory to the Investor Agenda accelerating action for a net-zero emissions economy
  • Signatory to the Access to Nutrition Initiative
  • Signatory to the Investor Statement on Coronavirus Response
  • Joined the PRI Corporate Tax Responsibility collaboration
  • Joined the PRI Preventing PFAS pollution by removing forever chemicals from food packaging collaboration
  • Joined the PRI the need for biodiversity impact metrics collaboration
  • Signatory to the Joint Investor Statement on Disability Inclusion
  • Signatory to Investors Against Slavery and Trafficking Asia-Pacific (IAST APAC)
  • Signatory to the Access to Nutrition Initiative
  • Signatory to the Investor Statement calling on companies to improve performance in the Corporate Human Rights Benchmark
  • PRI collaboration on investing with SDG Outcomes
  • PRI collaboration group on Preventing PFAS Pollution by removing forever chemicals from food packaging
  • PRI collaboration group on Corporate Tax Responsibility
  • PRI Plastics Working Group
  • Signatory to the “Open Letter to Social Media Companies on the one year anniversary of the Christchurch Terror Attacks” and the Collaboration for Engagement with Social Media Companies
  • PRI Investor Statement on Living Income and Wages and joined the Collaboration on Living Wage and Income
  • Signatory  to the Investor Case for Mandatory Human Rights Due Diligence Statement
  • Joined the SDG2 Advocacy Hub
  • Signatory to the Investor Statement calling on improved performance on corporate Human Rights benchmark
  • Signatory to the “Know the Chain Investor Statement” – Investor expectations on addressing forced labour in global supply chains
  • PRI Collaboration Group on investor guidance on Integrating Children’s Rights into Investment Decision Making
  • PRI Collaboration Group on collaborative engagement on Access to Medicine and SDG3
  • Signatory  to the Statement of Investor Commitment to Support a Just Transition on Climate Change
  • Investor Expectations on Climate Change for Airlines and Aerospace Companies – Principles of Responsible Investment (PRI)
  • Investor Statement in Support of Human Rights – Responsible Investment Association Australasia
  • Global Investor Statement on Farm Animal Welfare – Business Benchmark on Farm Animal Welfare

Country Risk

Where in the world a company does business is important to us. We use the Transparency International Corruptions Perceptions Index to help us assess overall country risk. High risk countries have higher incidences of bribery, corruption, lax governance, a poor regulatory environment and a high risk of human rights and environmental abuses.

Human Rights - Broad topic areas

Environment - Broad topic areas

Governance and management - Broad topic areas

As of March 2024, The Ethical Partners Australian Share Funds Weighted Total Emissions footprint (Scope 1 and 2) was 85.24% lower than the footprint of the ASX300 as a whole.

The United Nations environment finance initiative produced a 2023 case study on Ethical Partners. They profiled only five global managers globally. The case study acknowledged Ethical Partners' continued leadership in climate-oriented initiatives.


The Ethical Partners Australian Share Fund (EPASF) is actively managed in line with a Net Zero 2050 target, with an interim target of a 50% decrease in CO2 emissions (Scope 1 &2) by 2030 (from a baseline of June 2021).

Ethical Partners utilises our proprietary EPCAP (Ethical Partners Carbon Alignment Process) to assist in our alignment with progress against these targets. The graphs below demonstrate the key metrics that are being tracked.

Our markedly lower emissions footprint clearly demonstrates how our active management, our EPORA research analysis, portfolio construction and investment process allows our clients to hold a portfolio that aligns with their values, creates a much lower carbon impact on people and planet, and additionally, carries markedly less investment risk in a rapidly transitioning global economy.

As of March 2024, The Ethical Partners Australian Share Funds Weighted Total Emissions footprint (Scope 1 and 2) was 85.24% lower than the footprint of the ASX300 as a whole.

Weighted total emissions Ethical Partners Australian Share Fund vs ASX 300

Source: EPCAP, March 2024

This also represents a decrease of 62% since we established our Net Zero Scope 1 and 2 targets and our emissions baseline in June 2021, and places our fund well ahead of our target of a 50% reduction in CO2 emissions (Scope 1 and 2) by 2030, and Net Zero by 2050.

Weighted Total Emissions June 21 - March 24

Source: EPCAP, March 2024

As of March 2024, the ETHASF’s Weighted Average Carbon Intensity (WACI) is only 58% of the Weighted Average Carbon Emissions of the ASX300 as a whole.

WACI Ethical Partners Australian Share Fund vs ASX 300

Source: EPCAP, March 2024

This metric has also decreased significantly, by 42%,  since we established our carbon emissions targets and our emissions baseline in June 2021, and is well ahead of our targeted decrease.

WACI June 21 - March 24

Source: EPCAP, March 2024

Core in-house expertise

ESG is a core in-house competency

Detailed bottom up stock knowledge combined with a top down understanding of broader trends

Includes commercial sustainability providers, and domestic and international government, non-government and academic sources

We also liaise and utilise data from not-for-profits, community groups, environmental and human rights activists, consultants and ethical investment bodies.

Ethical Partners has supported the vast majority of climate and human rights resolutions.

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.

VIEW Modern Slavery Report - 2021/2022VIEW Modern Slavery Report - 2020/2021VIEW Modern Slavery Report - 2019/2020
ESG approach
Investment principles
Country Risk
Human rights
Governance and management
EPASF has lower carbon emissions than the market
Core in-house expertise
Voting record
ESG Policies

Responsible Investment

Investing in a responsible and sustainable way for the long term is at the core of what we do.

The Responsible Investment Policy recognises that Ethical Partners Funds has an integral commitment to investing in a responsible, ethical and sustainable manner.

Proxy Voting Policy

Stewardship policy

Climate Change, Natural Capital and Environmental Factors policy

Governance Factors policy

Human Rights and Social Factors in Investment