It’s been a tough year for many people around the world. But despite everything that’s happened in 2020, we’ve continued to make a positive impact through our investments, engagement and charitable donations.
2020 was a year that challenged the way we interact with society and our loved ones. And it’s been exhausting to work through the stream of bad news throughout the year. Fortunately, some of the terrible events of the past year have had a silver lining:
- Both the bushfires and the pandemic highlighted the importance (and underappreciation) of essential workers like firefighters, nurses and caregivers.
- The horrific killing of George Floyd and many other black lives in the US was a tragic reminder of the systemic and institutional racism that still exists within our societies. It led to massive worldwide protests that raised awareness about institutional racism and we hope it leads to systematic change.
- The pandemic led to a collaborative global effort to develop a vaccine in less than a year. Previously, the fastest vaccine to market was for mumps – and that took four years.
Even more encouragingly, the election of Joe Biden in the US could put the world back on track to take action on climate change.
Amid all this uncertainty, Australian Ethical’s commitment to sustainability has been a reassuringly consistent feature of 2020. In line with the Australian Ethical Charter, we continue to maintain nil investment in nuclear, tobacco, fossil fuel and gambling companies. Our share investments produced far less emissions than the broader share market, recently measured as 75% less carbon intensive than the benchmark (as at December 2019). We also invest five times more in renewable power generation than the global share market.
Getting results by engaging
We don’t ‘set and forget’ when we make investments. Instead, when we see areas that a company can improve in, we engage with management to encourage positive change. Importantly, we focus our energies on areas where we can add something unique rather than ‘piling on’ to every issue that hits the headlines. During FY20 our ethics team engaged with over 400 companies and saw over 70 make or commit to positive change. We don’t claim all the credit for these changes, but we’re happy to lend our powerful voice to efforts to persuade companies to commit to more sustainable practices. In FY20 almost three-quarters of our engagement was focused on climate change and people, with an emphasis on encouraging corporate climate action as well as protecting human and labour rights.
Doing good by giving
As well as creating an impact through the companies we invest in, we also help fund not-for-profit organisations through the Australian Ethical Foundation. Our constitution requires that we gift 10% of our profits (before bonuses and after tax) to charitable, benevolent and conservation causes. Since 2000, we’ve donated more than $5 million to worthy causes. In FY20 we set aside $1.3 million to distribute to charities that support our key pillars of the planet, people and animals. This money is distributed via community grants, multi-year strategic grants and impact investments. In FY20, we also made emergency funding available to bushfire recovery efforts and COVID-19 pandemic community support.
The core focus of the Foundation is climate change, because without a healthy planet it will become increasingly difficult to address other closely related issues. That’s why we use Paul Hawken’s ‘Project Drawdown’ methodology as a guide when considering which organisations to support. This approach provides a framework to assess some of the most effective solutions to address climate change. As a result, the Foundation focuses on issues like empowering women and girls, reforestation, habitat conservation and ‘blue carbon’ initiatives such as protecting and restoring coastal wetlands.
Making a tangible impact
This year we’ve published a comprehensive report into our alignment with the 17 global Sustainable Development Goals (SDGs). These goals were set out by the United Nations General Assembly in 2015 to achieve a more sustainable future for all people by 2030. In the coming ‘Decade of Action’ some of the goals include quality education, reduced inequality and climate action.
Looking at the Australian Ethical Charter, every one of our 23 principles aligns with at least one of the UN global SDGs. Our largest impact is in education (SDG number 4) where we have a sustainable impact of 16 times the general share market. In pollution prevention (aligned with SDGs 6, 12, 14 and 15) we have an impact that is over 12 times the broader market. Overall, we estimate the sustainable impact of the Australian and international shares we invest in is 3.8 times higher than an equivalent investment in the overall share market.
Offsetting our carbon footprint
As a business we have been offsetting our identified Scope 1 & 2 and 3 operational emissions since 2016. In FY20 we offset our emissions by purchasing carbon credits from the West Arnhem Land Fire Abatement project. This project is run by an Aboriginal-owned, not-for-profit carbon farming business that uses customary fire knowledge to accomplish large scale fire management on country. Our Foudation also provides funding to the Mimal Land Management Aboriginal Corporation (Mimal), a women’s ranger program, via the Karrkad Kanjdji Trust. Our fund will support Mimal through the procurement of their carbon abatement services as well as supporting their rangers who are working to preserve species, land and culture.
Looking to the long term
As a funds management business we look to make long-term investment decisions that ‘look through’ market volatility caused by events like the COVID-19 pandemic. We take the same approach with our engagement, advocacy and philanthropy efforts. Even in a year like 2020 you can rest assured we’ll stay true to the principles of our Ethical Charter by investing and advocating for the planet, people and animals.