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Australian Ethical Investment Ltd.

PRI reporting framework 2019

You are in Direct - Listed Equity Incorporation » Outputs and outcomes

Outputs and outcomes

LEI 12. How ESG incorporation has influenced portfolio composition

12.1. Indicate how your ESG incorporation strategies have influenced the composition of your portfolio(s) or investment universe.

Describe any reduction in your starting investment universe or other effects.

Australian Ethical uses both negative and positive screens included in our Ethical Charter. The effect of the Charter is to reduce our listed equities investment universe by more than 60%. It leads us to underweight positions in sectors like resources and financial services and overweight positions in sectors like healthcare and information technology.

Specify the percentage reduction (+/- 5%)

%

Select which of these effects followed your ESG integration:

12.2. Additional information.[Optional]


LEI 13. Examples of ESG issues that affected your investment view / performance

13.1. Provide examples of ESG issues that affected your investment view and/or performance during the reporting year.

ESG factor and explanation

For Australian shares, our negative and positive screening leads us to be underweight companies in the Materials, Banking and Energy sectors and overweight companies in the Healthcare and IT sectors.

ESG incorporation strategy applied Screening

Impact on investment decision or performance

Over the period the S&P/ASX200 index return was 13%. Relative to that index, the performance of our funds with Australian equities exposure was:

  • reduced by the underweight to Resources (returned 41%)
  • assisted by the underweight to Banks (returned -1%)
  • assisted by the overweight to Healthcare (returned 27%) and IT (returned 32%).

ESG factor and explanation

For international shares, our negative and positive screening leads us to be underweight companies in the Energy, Materials and Consumer Staples sectors and overweight companies in the Industrials, Telco and IT sectors.

ESG incorporation strategy applied Screening

Impact on investment decision or performance

Over the period the MSCI World ex-Australia return was 15%. Relative to that index, the performance of our funds with international equities exposure was:

  • assisted by the underweight to Consumer Staples (returned 2%)
  • assisted by the overweight to IT (returned 33%)
  • reduced by the overweight to Industrials (returned 11%) and Telcos (returned 2%)
  • reduced by the underweight to Energy (returned 29%) and Materials (returned 17%).

13.2. Additional information.[Optional]


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