At EPFM, we have undertaken several measures to ensure our investments are positioned for Climate Change.
While we apply some negative screening and avoid investing in some sectors completely, we consider Climate Change in all investments.
Our in-house proprietary investment process, the EPORA (Ethical Partners Operational Risk Assessment), considers companies’ policies, procedures, practices, investments,reporting, trajectory and commitment to Climate Change. It considers the companies’ or sectors’ relevant material Climate Change issues, controversies,and positive actions that have been undertaken to address these, as well as any inconsistencies, concerns and red flags as regarding how a company is addressing Climate Change. Wehave had over 500 company meetings with senior management since the launch of the inception of EPASF in August 2018.
Engagement is undertaken by each analyst, supported by our Sustainability and Advocacy Manger, the Investment Director and the CEO, and includes engagement with sustainability teams, risk management, investor relations, CEOs, and Boards. It may involve site visits, meetings, or ESG advocacy activities like EPFM speaking with banking fossil fuel lending teams, advising agricultural companies’ sustainability teams about investor expectations, educating investor relations about client exclusions on their stock due to fossil fuel lobbying concerns, or advising health insurers on sector collaboration and down-stream emissions reporting expectations.
Full policy attached.
Emma McCarthy recently joined Ethical Partners. Emma is a passionate final year law student and joins us as Sustainability and Advocacy Assistant. We are honoured to share with you her reflections on the recent UN Global Compact conference, and how it inspired her, as a new recruit to the global sustainability and human rights community, on her journey to fight for change.
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.