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Alphinity Investment Management Limited

PRI reporting framework 2020

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

Alphinity seeks quality, undervalued companies in or about to enter an earnings upgrade cycle. It identifies these companies through a combination of fundamental research, with ESG factors taken into account as a matter of course, and some quantitative analysis that can help direct the focus of our fundamental research.

"Governance structure of organisational ESG responsibilities" might be required for large/bureaucratic organisations but is not needed for 14-person firms with a flat structure

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

Alphinity has been a signatory to the Principles for Responsible for Investment since 2011. This position paper sets out Alphinity’s approach to ensuring the long-term sustainability of returns for its investors through the management of environmental, social and governance (ESG) risks and opportunities in its investment portfolios. This paper applies primarily to Alphinity’s Australian Equities operations. Alphinity Global Equities has a more limited ability to interact with its investee companies and exercise influence on those companies at this stage of its development, due to its size but it is working towards similar objectives as its activities mature. This paper should be read in conjunction with Alphinity’s ESG policy which covers some similar matters in a more specific manner.

Corporate responsibility
Alphinity has always integrated ESG considerations in its investment processes in order to better manage risk, and believes that in order to continue its success in long-term investing it needs to allocate capital to enterprises with sustainable business operations and practices. Long-term value creation is largely a result of the effective management of financial, physical and human capital so investment opportunities should be evaluated according governance practices, including labour practices, health, safety and diversity; social practices including community engagement; and environmental practices, including the management of natural resource scarcity and exposure to climate change risks.
Engagement: Alphinity has found the most effective way to align the interests of its investors with investee companies is through vigorous interaction, including discussion with the company of relevant responsible investment principles, encouraging them to improve and disclose.
Transparency: Alphinity believes transparency is consistent with good governance and that it should display an appropriate degree of transparency around its investment activities, within the sensible boundaries of commercial sensitivity. Similarly, the companies in which it invests should also strive toward a reasonable level of transparency, also within the sensible boundaries of commercial sensitivity.
Human rights: These are fundamental to a just society. Alphinity aims to promote and respect observance of basic human rights and freedoms and will encourage its investee companies to do the same. Alphinity was a signatory to the PRI engagement with the Australian Parliament which has resulted in the establishment of a Modern Slavery Act.
Climate Change: Alphinity acknowledges the findings of the Intergovernmental Panel on Climate Change and believes that a global challenge such as this needs to be addressed by coordinated actions by all parties, particularly our own government. Anthropogenic climate change is a material social and economic threat and might, in some cases, present economic opportunity to investee companies. The actions of businesses and individuals can play a critical part in mitigating the impact of a changing climate. We therefore need to take into account the impact on companies’ earnings and valuations of material current and future climate change risks and opportunities in the expectation that society will at some point move to limit global warming to below 2°C.

Alphinity incorporates ESG considerations into its investment and risk management processes and regularly reviews the ESG risk within its equity portfolios. The assessment of individual securities as investment opportunities and the consideration of ESG risks and opportunities pertaining to those securities is the responsibility of Alphinity’s portfolio managers and analysts. Alphinity will review at least quarterly the ESG attributes of its portfolios with the aim of being aware of where the risks and opportunities are concentrated. The review will include portfolio ESG factor scores using data provided by a recognised ESG research house; estimation of portfolio carbon metrics using data provided by a recognised research house; consideration of social risks through the assessment of exposure to human rights, and safety; specific consideration of climate change transition risk through exposure to fossil fuels of companies operating in carbon-intensive industries; specific consideration of climate change physical risks to investee companies’ assets through assessment of the impact of extreme weather events, changing weather patterns and rising sea levels on physical assets and supply chains. Regarding climate change, Alphinity will ensure that an appropriate carbon price is factored into the analysis of companies where relevant. That price is reviewed annually with an eye on changes in the international market price of carbon, extrapolating trends when appropriate.

Alphinity has found that active engagement with a company generally leads to a better understanding of how that company intends to fulfil its obligations as a responsible corporation as well as making the company aware of our expectations as a responsible shareholder. Alphinity engages with investee management on all matters it believes will have a material impact on its long-term sustainable value, and on ESG practices it believes the company should be reviewing. The intent of this dialogue is not to make Alphinity aware of inside information: quite the opposite. Possession of inside information is a significant personal and business risk, and acting on inside information is a crime. The intent is to improve the company’s awareness of the various risks and opportunities that will allow it to make better decisions, which will improve social outcomes and benefit shareholders over the medium and long term. 

Alphinity votes all proxies and engages with companies in a manner consistent with its Corporate Responsibility Principles, subject to client direction. Proxies are a valuable asset and we have a duty to vote proxies in investee companies to promote good ESG practices. Alphinity engages a proxy adviser to advise on proxy votes but will ultimately make its own decisions. Votes are cast in a manner consistent with our duties and responsibilities to investors. Votes are to be cast in a manner consistent with long-term value creation and good governance. Alphinity will not generally abstain from voting unless is directed to by a client, or it has exited the stock prior to the meeting being held. Where Alphinity intends to vote against a board or management recommendation, Alphinity will engage with the company to inform them of the reasons with the expectation that the issue should not reoccur in the future.

Further detail is on the website about avoiding companies, collaboration and transparency


01.6. Additional information [Optional].


SG 01 CC. Climate risk

01.6 CC. Indicate whether your organisation has identified transition and physical climate-related risks and opportunities and factored this into the investment strategies and products, within the organisation’s investment time horizon.

Describe why your organisation has not yet gone through a process to identify transition and physical climate-related risks and opportunities.

We are in the process of doing this for the companies we invest in. TCFD is only in the early stages of being adopted and reported on in this market but we are hopeful that sufficient data will be available over the course of 2020 to allow a meaningful assessment of risks ad opportunities at some point this year.

01.8 CC. Indicate whether the organisation publicly supports the TCFD?

01.9 CC. Indicate whether there is an organisation-wide strategy in place to identify and manage material climate-related risks and opportunities.


We are in the process of working with information providers to obtain accurate and meaningful data to help with this

1.10 CC. Indicate the documents and/or communications the organisation uses to publish TCFD disclosures.

SG 02. Publicly available RI policy or guidance documents


02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.







02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

02.3. Additional information [Optional].

SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Alphinity aims to:

* maintain the integrity of our advice and services to clients;

* act efficiently, honestly and fairly;

* comply with all relevant financial services laws, ASIC guidance and the requirements of our Australian Financial Services Licence; 

* comply with all agency and fiduciary obligations under the common law.

We have in place  arrangements for the management of conflicts of interest that may arise, wholly or partially, in relation to activities undertaken by us or our representatives in the provision of financial services as part of our business.

The Board is committed to ensuring the adequacy of our conflicts of interest arrangements and has appointed the Compliance Manager as the responsible person for implementing, reviewing and updating these arrangements as per the Policy.

We manage conflicts in accordance with a three-step conflicts management process that involves identifying, assessing and responding to conflicts.


03.3. Additional information. [Optional]

SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within investee entities.

04.2. Describe your process on managing incidents

Lacking bureaucracy we don't need such a process: the person who carries out responsible investing analysis of a company is the same person that carries out investment research on that company. We  know what is going on in the companies we're invested in so are well placed to identify and respond to incidents should they occur.