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Alphinity Investment Management Limited

PRI reporting framework 2020

You are in Strategy and Governance » ESG issues in asset allocation

ESG issues in asset allocation

SG 13. ESG issues in strategic asset allocation

13.1. Indicate whether the organisation carries out scenario analysis and/or modelling, and if it does, provide a description of the scenario analysis (by asset class, sector, strategic asset allocation, etc.).

13.3. Additional information. [OPTIONAL]

all our activities are around bottom-up stock selection, not asset allocation. ESG and Climate factors are assessed on a company-by-company basis.

As TCFD becomes more reported on by companies the usefulness of that information will improve and we will be better placed to conduct scenario anaylsis


SG 13 CC.


SG 14. Long term investment risks and opportunity

14.1. Some investment risks and opportunities arise as a result of long term trends. Indicate which of the following are considered.

other description (1)

          Sustainable Develepment
        

14.2. Indicate which of the following activities you have undertaken to respond to climate change risk and opportunity

14.3. Indicate which of the following tools the organisation uses to manage climate-related risks and opportunities.

14.4. If you selected disclosure on emissions risks, list any specific climate related disclosure tools or frameworks that you used.

We presently use MSCI carbon data  There are still relatively few Australian companies that report according to TCFD standards so much of the data is estimated. There are serious shortcomings in calculating this data as the emissions of so many companies is estimated. However our assessment of portfolio emissions intensity generally comes out materially lower than the benchmark for all portfolios.

14.5. Additional information [Optional]

We calculate carbon emisisons intensity and footprint of our portfolios however as the input data is so questionable we put lots of caveats over the output. 

Much work still needs to be done to get consistent and comparable data


SG 14 CC.

14.6 CC. Provide further details on the key metric(s) used to assess climate-related risks and opportunities.

Metric Type
Coverage
Purpose
Metric Unit
Metric Methodology
Weighted average carbon intensity
          Allow investors to see an estimate of the emissions intensity of the fund they are invested in
        
          tonnes of scope 1 and 2 CO2 equivalent emitted per $US million of revenue
        
          divide disclosed/estimated emissions of company (sourced from MSCI) into $US revenue of company
        
Carbon footprint (scope 1 and 2)
          
        
          
        
          
        
Portfolio carbon footprint
          Allow investors to see an estimate of the footprint of the portfolio and thus their own proportionate contribution
        
          tonnes emitted per $million invested
        
          total company emissions divided by portfolio's share of the company, summed across all companies and divided into the size of the portfolio, then divided into million-dollar shares
        
Total carbon emissions
          a subset of the portfolio carbon footprint above
        
          
        
          
        
Carbon intensity
          see above in WACI
        
          
        
          
        

14.8 CC. Indicate whether climate-related risks are integrated into overall risk management and explain the risk management processes used for identifying, assessing and managing climate-related risks.

Please describe

At present, carbon calcualatinos are for information only. We do not put targets in place for number of reasons, including the inaccuracy of estimates provided and the perverse impact of currency movements on the final metrics

14.9 CC. Indicate whether your organisation, and/or external investment manager or service providers acting on your behalf, undertake active ownership activities to encourage TCFD adoption.

Please describe

Yes - we encourage all companies to report under TCFD guidelines so that there will eventually be consistent and reliable numbers from which to make meaningful conclusions


SG 15. Allocation of assets to environmental and social themed areas

15.1. Indicate if your organisation allocates assets to, or manages, funds based on specific environmental and social themed areas.

15.2. Indicate the percentage of your total AUM invested in environmental and social themed areas.

4 %

15.3. Specify which thematic area(s) you invest in, indicate the percentage of your AUM in the particular asset class and provide a brief description.

Area

Asset class invested

5 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

Encouraging the replacement of energy generation via coal with gas as a stepping stone towards renewable energy. One of the challenges is that there are few companies of sufficient scale in our domestic universe that are purely renewable, and some of the major players in renewables also operate coal-fired plants. 

Asset class invested

5 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

The Fund has a position in a company that owns solar power generation in Australia and the USA, also in an energy infrastructure company thta has significant solar assets and is developing a technology for transporting hydrogen through gas pipelines which

Asset class invested

10 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

Two AREITs which have improved green star ratings on buildings through energy efficiency efforts (in brownfields) and design (in greenfields), including installing mass solar collectors on industrial buildings.

Asset class invested

5 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

Listed conmpany which, among other things, dedicates a proportion of apartments developed to social housing groups and first home-buyers;

Listed company that specalises in affordable housing communities for retired people

Asset class invested

5 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

English language testing company which teaches and assesses language skills and matches students with university places in various parts of the world 

Asset class invested

25 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

Three health care companies involved in

a) prevention of cancer (HPV),producing vaccines, blood fractionation and treatment of haemophilia,

b) production of humidifiers for ventilators

c) production of CPAP machines for treatment of  sleep apnea.

Also invested in a Hospital operator and a health insurance provider

Asset class invested

1 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

Company that produces small-scale distributed water treatment and desalination plants for use in third world countries

15.4. Please attach any supporting information you wish to include. [OPTIONAL]



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