In the Ethical Partners Operational Risk Assessment which is used for the Ethical Partners Australian Share Fund, we exclude companies that have significant operations in countries that are in the bottom third of the Transparency International Corruption Perceptions Index (TICPI). The Index is an independent tool which ranks 176 countries and territories by their perceived levels of corruption. Our reasoning for excluding companies in the bottom third of the TICPI are several. Firstly, we believe that there is a higher risk of human rights abuses taking place in these countries due to their higher levels of corruption. Additionally, there are lower levels of transparency and lower standards of governance. Secondly from an investment point of view, being a bottom up stock picker who visits company assets from time to time, it can be both dangerous and sometimes impossible to gain access to company operations in these countries. This makes the valuation of assets difficult and lowers confidence in an investment case. Thirdly we believe that generally, for those companies operating in such regions, there is a less stable political and regulatory environment, more chance of encountering issues such as nepotism, bribery, raised costs, the undermining of fair prices and competition and reputational risks, that ultimately leads to higher business risk. Ethical Partners clients can feel satisfied that they will not be supporting companies that operate in such areas and that we have taken steps to avoid these identifiable investment risks.
While the response to climate change risk by regulators, financial institutions and publicly listed companies is welcome, it currently is not enough to ensure a safe climate. This submission provides a comprehensive assessment of the current risks relating to Australia's key export sectors.
It is estimated that 100 pairs of hands touch your clothes before they arrive in your wardrobe. That’s 100 people at risk of modern slavery, poor working conditions, and exploitation. Ethical Partners has recently signed the Investor Statement in Support of the maintenance and expansion of the Bangladesh Accord.
During March 2021 the Fund returned 3.07% versus the S&P/ASX 300 Accumulation Index of 2.30%, outperforming the market by 0.77%. An overweight position in consumer staples and an underweight position in materials contributed to relative performance while an overweight position in financials and an underweight position in consumer discretionary detracted from relative performance. The Fund is +20% over the last six months.
Globally, 15% of the population are persons with disabilities. The labor force participation rate globally for people with disabilities sits at 32.8% compared to 77.1% for those without disabilities. We believe it is imperative that investors use their shareholder voice to raise the awareness of this important diversity issue and help companies to improve their inclusion.