Australian Ethical is a pure-play ethical investment manager, only offering ethical funds across Australian Equities, International Equities and Multi-asset funds. It offers seven superannuation and six pension options to its members as well as fifteen managed funds options, an SMA and an ETF product.
Australian Ethical was one of the first superannuation companies in Australia to sell super directly to customers using a digital marketing approach, and now also sells managed funds directly, as well as through a network of advisers and private wealth firms. They also have a small institutional business providing managed funds to organisations, largely not-for-profit and values-aligned.
Give investors access to ethically screened portfolios of companies and other investments which are more aligned with their values than market portfolios.
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Influence progress towards a better future for people, animals and the environment by engaging with select companies to improve key business practices.
Help them identify, understand and manage investment risk and opportunity, at a company, portfolio and systemic level.
Their investment process involves:
Ethical assessment – the in-house Ethical Research team assess possible investments according to the 23 principles of the Ethical Charter, using the contemporary decision frameworks (and criteria) that bring these to life. This process identifies companies that Australian Ethical believe can influence progress towards a better future for people, animals and the environment and restricts those that they believe aren’t; and this research defines their universe of potential ethical investments.
Investment analysis and construction – Australian Ethical’s investment team then constructs portfolios suitable for the investment strategies and return objectives of funds and options. Their investment strategy results in equity and multi-asset funds that are overweight versus benchmark in renewables, technology and healthcare with on average 4.1x more investment in renewable energy than the benchmark.
Ethical stewardship – The ethics research team also monitors investee companies and engage to influence companies, governments and others as an important part of the process. As an investor they can encourage companies to create more positive impact and avoid negative impact in different ways – sometimes a simple discussion with management works. But they can also encourage change by:
voting for changes to directors and executive remuneration more aligned with sustainable business strategies
collaborating with other investors to signal shared expectations for more responsible business practices
voting against a merger or a demerger proposal
publicly questioning company decisions at AGMs and through the media, including through proposing and supporting shareholder resolutions.
Divestment, and the threat of divestment, is another tool. If done at scale it can affect a company’s cost of capital, making it less competitive than its more sustainable competitors. If done publicly, it can impact a company’s reputation. It can also create market signals that help influence broader change
Australian Ethical’s stewardship includes strategic action for change on a small number of priority issues which have included:
Stopping finance and insurance helping expand the fossil fuel sector
Reducing harm to animals from animal testing and research
Stopping livestock driven deforestation in Australia
Reducing emissions from high emissions building products.
