"I think a common experience for young people as they become more and more aware of how the world works is a questioning of norms and grey-area corporate acts: why have certain actions and inactions been allowed without repercussion? What about the people that affected? This questioning is often met with condescending affirmation of the status quo, implying the questioning is naïve in the first place. It is easy to see how this breeds a paradigm of not asking questions, adapting to a counter-productive workplace culture, glossing over issues and sometimes an attitude of cynicism. In attempting to fight this seemingly insistent bureaucracy and passivity, as a young person, it can be hard to know where to begin.
It was with these questions in my mind that on 25 August I had the pleasure of attending the 2020 Australian Dialogue on Business and Human Rights held by the UN Global Compact virtual conference. The recurring themes throughout the conference of being brave, challenging unconscious bias, and asking uncomfortable questions reiterated that young people should not be staying silent when these issues come up” .
During August 2020 the Fund returned 4.10% versus the S&P/ASX 300 Accumulation Index of 3.05%, outperforming by 1.05% (after fees). Overweight positions in Consumer Staples and Industrials added to performance while stocks in General Insurance and Building Products detracted from performance.
It appears that the Australian economy will be asked to grow itself out of debt post COVID rather than experience an increase in taxes once the economy is more stable. So what are the long term projects that would change Australia for the better? It was quite timely indeed then that the Australian Energy Market Operator (AEMO) recently released its 2020 Integrated System Plan (ISP). It appears to us that AEMO has put down the framework for how Australia will operate with less coal fired electricity generation given we have an aging fleet which will be gradually de-commissioned over the next 20 years.The AEMO Plan is a whole of system blueprint for the evolution and change the electricity market will experience in the 20 years to 2040. It expects 63% of the current coal fired power stations to close by then based on company disclosures and end of life assumptions. Herein lies Australia's great stimulus opportunity.
The last quarter has been the best of times for unprofitable but growing companies and the worst of times for value managers and others trying to buy equities with any margin of safety. Speculative activity in markets has been driven by excess central bank liquidity and real yields moving to -100bps, pushing risk assets higher, the valuations of technology companies up to levels not seen before and gold to all-time highs at around $2,000 USD per ounce.
The 2020 Ethical Partners Engagement Report provides a useful summary of all areas of company engagement the team has undertaken over 2019/20. It provides details of the successes, the key issues as we see them moving forward, our voting record, provides company ESG engagement examples and lists the 20+ major collaborations in which we have been involved. As always we welcome questions and feedback.