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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.

Ethical Investment Process - U Ethical’s investment process ensures that all investment decisions are in keeping with our vision and that they promote careful financial stewardship. This is achieved through the application of positive and negative screens, and engagement with companies - together with a focus on competitive economic returns and sustainability.

Positive Screening

Our positive screen seeks out companies that promote human welfare and dignity or environmental sustainability. We screen positively for sectors such as: clean energy, sustainable agriculture, recycling and reuse, employment, community and education services and health care. We assess our positive thematic companies on their net contribution to the achievement of the UN Sustainable Development Goals.

U Ethical avoids investing in companies that:

cause unacceptable damage to the natural environment
infringe on human rights
support oppressive regimes
cause or perpetuate injustice and suffering
have unacceptable occupational health and safety practices

Our negative screening approach means we systematically exclude the following industries due to their inherent negative impacts:

Fossil fuels (power generation, exploration and extraction)
Predatory lending
Pornography and adult entertainment
Animal cruelty
Alcohol production
Tobacco manufacturing

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]

In practice, the majority of investments are in companies that are considered to be neutral in terms of the positive and negative screens. Such investments are made on the basis of fundamental investment criteria, assisting U Ethical to exercise good stewardship, and provide a reliable source of income and capital growth. 

We apply a materiality threshold of 5% exposure across our exclusion criteria, as we recognise it can be challenging to screen all negative activity with 100% conviction. In addition, where companies have an insignificant exposure to an excluded activity, this may be outweighed by other positive aspects of their business. 

We also work with peers and industry bodies to promote the ethical approach with participation in working groups, media releases and sponsorships. We are currently involved in numerous collaboration efforts with peers and industry groups to collectively lobby companies.

Our advocacy is applied in recognition of our limited resources. We have traditonally lobbied and sought explanation from industry around two or three critical issues. It is our conscious effort to make a difference. 

We actively vote our proxies (See Voting Policy) and incorporate strong gender diversity targets and remuneration caps. We also seek to actively engage with companies on ethical issues and look to effect positive change via direct engagement and collaboration. We have a documented set of principles stipulating when and how we engage with companies.




01.6. Additional information [Optional].


SG 01 CC. Climate risk (Private)

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.

U Ethical has a number of policies in place which address conflicts of interest throughout the investment process, including but not limited to:

U Ethical Best Execution and Trade Allocation Guidelines
U Ethical Segregation of Duties Policy
U Ethical Personal Securities Trading Policy
U Ethical Gifts and Benefits Policy

U Ethical also conducts a quarterly review of its holdings assessing compliance with the Ethical Investment Policy.

A quarterly review of the ASX300 is also conducted for possible breaches of the exclusion criteria within the Ethical Investment Policy. Companies who may engage in practices that do not pass our screening criteria are placed on our public exclusion list, subject to approval from the Investment Committee.

03.3. Additional information. [Optional]

SG 04. Identifying incidents occurring within portfolios (Private)