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Ethical stewardship

We need systemic change across multiple industries to tackle the most difficult and important challenges of our time, such as climate change, the biodiversity crisis, human rights abuse, and industrialised animal cruelty. Allocating capital to positive companies and avoiding investing in harmful ones is critical to resolving the global challenges we face. But we know that on its own, our ethical screen is not enough to achieve the economic and social transformation we need to get to a future where people, animals and the planet prosper consistent with the aims of the Ethical Charter.

Investor stewardship is one way we can directly have real world influence. Investor stewardship leverages the capital our members have entrusted to us to influence investee companies, the economy and society. Often, investor stewardship is solely focused on lowering the risks and improving the returns of individual holdings and the portfolio. We certainly do this at Australian Ethical, but we also do more.

We do Ethical Stewardship. Ethical Stewardship is focused on reducing the negative and increasing the positive impacts of companies and achieving systemic change at an economy or society-wide scale. We are here to make money and a difference.

Here is a snapshot of some of our Ethical Stewardship activities.


Turning off finance for fossil fuels

The fossil fuel sector has been a prime target of our investor advocacy. We do not invest in fossil fuel companies. But we leverage our investment in the finance sector to campaign against the unsustainable expansion of fossil fuels and encourage the financing of renewables.

Learn more

Animal agriculture has a hugely disproportionate contribution to both the climate and biodiversity crises. We do not invest in conventional animal agriculture because of its large environmental footprint and because of the animals’ suffering. But much like the fossil fuel sector, we can leverage our connections to adjacent industries to influence change.

In the first half of FY22:

  • We explored potential engagement initiatives with a few NGOs and investor groups. We are hopeful these discussions will lay the groundwork for more effective collaborative engagement with key players in the Australian livestock value chain.
  • We were one of 30 financial institutions around the world that signed up to the financial sector commitment letter on eliminating commodity-driven deforestation from portfolios by 2025. You can read more about this here.
  • We continue to contribute to the UNPRI’s Sustainable Commodities Practitioner’s Working Group that aims to address deforestation in beef, soy, palm oil and timber supply chains.
  • We continue to contribute to \the RIAA Natural Capital working group.

The building materials sector is a huge contributor to global carbon emissions. Cement production is the world's single largest industrial cause of carbon pollution, responsible for around 8% of global carbon emissions. Steel accounts for another 7%.

Through our engagements and involvement in MECLA and Climate Action 100+, we are seeking to help hasten the supply and uptake of transformational low or zero carbon products such as green steel, low carbon cement and products made from recycled content.

We are one of two lead investors for the Climate Action 100+ engagement with Boral. We met with Boral in July and October, and were pleased to see the company commit to setting 1.5 degree aligned Science Based Targets. It announced 2025 and 2030 reduction targets for its scope 1 and 2 emissions (18% and 46% from a FY19 baseline); and a 2030 scope 3 reduction target for cement based materials (22% per tonne). We also met with a major Australian industrial company to discuss how they are seeking to mitigate the emissions impacts of their products. We encouraged them to adopt a commitment to net zero and consider involvement in MECLA.

We supported Western Australian Aboriginal groups’ calls to halt the WA state government’s Aboriginal Cultural Heritage Bill 2021. The Bill would fail to prevent another Juukan Gorge disaster. We called on the government to ensure Indigenous Peoples are appropriately consulted to revise the Bill.

In the first half of FY22 we engaged with six companies about their approach to various human rights issues including the risk of human rights abuse in supply chains, corporate accountability for digital rights and use of data, and the treatment of elders in aged care.

In the first half of FY22 we engaged 11 companies about their approach to diversity. Seven of these engagements were ongoing discussions from our FY21 diversity engagement program. Over the course of these ongoing engagements, to date four companies have committed to improve or have implemented improvements to their approach to diversity.

We continued our ongoing engagement with Lendlease about the impact of a proposed development on a local koala colony. Our engagement with Lendlease has secured greater protections for koalas. More information available here.

We continued our ongoing engagement with Blackmores about supporting a transition from fish oil products to less impactful plant based alternatives.

Australian Ethical acknowledges the Traditional Owners of the country on which we work, the Gadigal people of the Eora Nation, and recognise and celebrate their continuing connection to land, waters and culture. We pay our respects to Elders past, present and emerging and thank them for protecting Country since time immemorial.