Our impact

Disclaimer:
4. Emissions of Australian Ethical share investments compared to benchmark of S&P ASX 200 Index (for Australian shareholdings) and MSCI World ex Australia Index (for international shareholdings). Calculated as at 31 December 2018.

5. Since 1 July 2016 we have been free from all companies whose main business is fossil fuels, as well as diversified companies that earn some fossil fuel revenue and aren’t creating positive impact with their other actives. We may invest in a diversified company which is having a positive impact in other ways such as producing renewable energy, provided its fossil fuel revenue is sufficiently low (a maximum of 5% to 33% depending on the fuel). (Assured by KPMG.)

6. We have never invested in tobacco and support Tobacco Free Portfolios.

7. Proportion of our share investments in renewable power generation compared to the global share market.

The carbon footprint of our investments is one way to check the effectiveness of our ethical investment approach to manage climate risk and support the transition to zero-emissions. The carbon footprint of our share investments at the end of 2018 was more than a third of the market benchmark*.  

At a sector level, this comes from our very low exposure to high emission industry sectors such as mining, and our significant exposure to low emission sectors such as healthcare and information technology (IT).

Our share portfolio is 70% less carbon intensive than the benchmark^

Our carbon footprint target is net zero emissions

*Carbon footprint and carbon intensity are measured in tonnes CO2 e/AUDm revenue.

The benchmark is a blended bechnmark of S&P ASX 200 Index (for Australian share holdings) and MSCI World ex Australia index (for international share holdings).

We assess our share investment footprint based on the carbon intensity of the companies we invest in. The carbon intensity is calculated from direct and some indirect emissions of the companies relative to their revenue. The portfolio carbon intensity has been assessed by Trucost, part of S&P Global, that provides analysis of carbon and other environmental impacts of companies and portfolios. The analysis of Trucost is copyright © 2018 S&P Trucost Limited.

Current carbon footprinting methods don’t do a good job of including emissions produced, or emissions saved, from use of a company’s products by customers. This means that the carbon footprint of a company can misrepresent the company’s positive and negative climate impacts. For example, the footprint of a coal mining company generally doesn’t include the emissions from the burning of its coal by its customers. And the footprint of a company manufacturing wind turbines doesn’t generally include the emissions savings enjoed by its customers and the planet from generation of zero emissions electricity. We take these limitations of footprinting into account when we interpret footprint data for individual investments and our broader portfolio. 

^ Assured by KPMG

Our investment in sustainable impact

	Sustainable impact revenue per $1 million invested	Investment examples	Sustainable impact examples	Contributing to Sustainable Development Goals
Alternative energy	$15,320 9 times market	Contact Energy Infigen Energy Mercury NZVestas Wind Systems	Wind, geothermal, solar, and hydro electricity
Energy efficiency	$14,820 4 times market	East Japan Jungheinrich AG Owens Corning Tesla Inc	Rail, insulation, electric cars, batteries
Green building	$5,980 2.6 times market	Lendlease Stockland Mirvac Group	Certified commercial and residential green buildings
Sustainable water	$2,330 6.5 times market	Aegion Corp United Utilities Veolia Environnement Xylem Inc	Water supply, treatment and recycling
Pollution prevention	$16,460 6 times market	Asahi Holdings Darling Ingredients Interface Inc Sims Metal	Recycling of metal, electronics and food
Nutrition	$4,770 0.5 times market	Costa Group Holdings J Sainsbury Plc	Basic food products including fresh fruits and vegetables
Affordable real estate	$1,450 2.6 times market	Lendlease Welltower HCP, Inc	Seniors and other affordable housing
Major disease treatment	$4,120 0.9 times market*	Amgen Inc Biogen CSL Limited Resmed	Medicine for blood, kidney and breathing disorders and influenza
Sanitation	$2,180 1.3 times market	Australian Pharmaceutical Industries Toto Limited	Cleaning products, toilets, washbasins
SME finance	$70 0.1 times market	Natixis SA Skandinaviska Enskilda Banken	Loans to small and medium business
Education	$4,220 17.8 times market	G8 Education IDP Education Pearson Plc	Digital tools for teachers, learners and researchers

The revenue estimates in the table are for selected positive products and services which are produced by Australian and international companies whose shares we invest in and that have been analysed by global research firm MSCI ESG Research LLC for their “sustainable impact”. MSCI ESG Research have done this analysis for 78% of our share investments (by value). We assume that the $1 million is invested in listed shares of these companies only. We do not take account of our other investments such as fixed income, unlisted investments or our investments in companies which are not analysed by MSCI ESG Research for sustainable impact. Since they only look at selected products and services, MSCI ESG Research’s analysis of revenue from sustainable impact does not take account of all positive contributions that companies make to the SDGs. The MSCI ESG Research calculation methodology makes many assumptions, further information is available here.
MSCI ESG Research exclude any sustainable impact revenue of companies which do not meet certain minimum ESG standards. However, we have included sustainable impact revenue of companies which were excluded because the companies were not assigned an ESG rating by MSCI ESG Research.
Using the MSCI ESG Research data we estimate our total sustainable impact to be 3.1 times the sustainable impact of investment of the same amount in the overall share market. This estimate is based only on investment in shares in companies which MSCI ESG Research analyse for sustainable impact. The overall share market is a blend of the S&P ASX 200 Index (for Australian and New Zealand share holdings) and the MSCI World ex Australia Index (for international fund share holdings). The above analysis is based on our share investments as at 31 December 2018.
Although we have used company research data provided by MSCI ESG Research, MSCI ESG Research is not responsible for the way in which we have used that data to calculate the above amounts. MSCI ESG Research (1) retains copyright in all its data; (2) does not warrant or guarantee the originality, accuracy and/or completeness of their data; (3) makes no express or implied warranties of any kind, and disclaims all warranties of merchantability and fitness for a particular purpose; (4) has no liability for any errors or omissions in connection with their data or for our reporting and use of their data; and (5) without limiting any of the foregoing, has no liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.