AMP Capital Sustainable Shares Fund

Product Name

AMP Capital Sustainable Shares Fund

Issuer

AMP Capital

Category

Investment product

Type

Fund/Trust

Target

Retail, Wholesale

Certified Since

2005

Certification Symbol

Responsible Investment

Asset Classes

Equities - Australian only

Markets

Australia

Investment Approaches

Negative Screening, ESG Integration, Engagement: Constructive engagement is the process by which companies are encouraged to improve their social and environmental performances. This forms part of AMP Capital’s broader corporate governance practice, demonstrating commitment to the values of sustainability and corporate social responsibility. The focus on engagement means investors can be assured that their views on important environmental and social issues will be considered by the companies in which the Sustainable Fund invests. Constructive engagement is predominantly executed by AMP Capital’s ESG researchers. The initial work involves scoping key environmental and social issues through discussions with clients, companies, industry bodies and NGOs. Following this, position papers that reveal conclusions on best practice standards and investment policies are produced. In publicising these, AMP Capital contributes to the broader policy debate that takes place around these issues. Finally, as part of AMP Capital’s company assessment process, companies are engaged to review the position papers via face-to-face meetings, telephone conversations and questionnaires. Having an in-house ESG research team means engagement is not divorced from the management process. Therefore, clients can be confident that AMP Capital has the ability to achieve practical outcomes. In summary, AMP Capital believes that well managed companies: •Have boards comprised of well-qualified, predominantly independent directors •Understand risk management and are likely to avoid costly disasters •Act responsibly, ethically and transparently •Consider how Environmental, Social and Governance issues relate to their business over the long-term and are responsive to the risks and opportunities these present •Remunerate fairly and are aligned with shareholder interests Key areas of engagement are climate change, human rights and supply chains, gender diversity, and coal seam gas. We implement our RI strategies through our in-depth research agenda including the following: - ESG Research. The ESG Research Team analyses a wide range of non-financial drivers in two stages: sustainability drivers impacting an industry's long-term growth potential as well as each company's intangible capabilities to respond to their external environment. The Team researches companies using a proprietary database of over 200 metrics. A company ESG performance is ranked on measures of sustainability, environmental and social responsibility and corporate governance. Inputs to the research process include meetings with company management and a range of other stakeholders (such as non-government organisations [NGOs], unions, government representatives and investors) - Company contact. The team places great emphasis on face-to-face company contact and includes both one-on-one meetings as well as site and operational visits. The team averages in excess of 600 one-on-one company meetings each year. - Analysis. Analysts focus on financial modelling and forecasting using independent sources as much as possible and quantifying their conviction levels. - Non-consensus information sources. The team considers information from non-consensus sources, such as suppliers, competitors, customers, industry bodies, networks and industry contacts, to be of high importance. - Travel. Team members ensure that they travel (both interstate and overseas) to visit related industries and suppliers, as well as the clients of companies in which the Fund invests. This provides team members with a broader perspective and, potentially, additional insights. - Wider AMP Capital group. Interaction with other teams within AMP Capital, particularly with the Investment Strategy & Economics Team, and the Credit Markets Team to encourages the leverage of investment knowledge and information sharing across groups and provide additional sources of insight to the research process. - Peer review and team meetings. These are important steps in developing conviction. This process happens both formally (in team meetings) and informally. Analysts are encouraged to discuss and review ideas and investment thinking with each other as well as portfolio managers. This process is aimed at improving the consistency and quality of our investment insights through sharing knowledge, getting each other’s perspectives, identifying risks and so forth. Any major change in views, new stock initiations and sector analyses should undergo both team and cross regional review. - External systems. The Australian Equities Team makes use of a variety of external tools to facilitate the research and portfolio construction process. These include: Northfield and Barra risk models, FactSet Analytics, IRESS and Bloomberg. In early 2010, the Australian Equities Team commenced using the Charles River Investment Management System (CRIMS) for modelling, trading and pre/post execution compliance checks.

It Includes

  • Riaa icons 11 More sustainable companies

It Excludes

  • Riaa icons 33 Fossil fuels
  • Riaa icons 34 Logging
  • Riaa icons 35 Tobacco
  • Riaa icons 50 Nuclear energy (including uranium)
  • Riaa icons 52 Human rights violations
  • Riaa icons 38 Labour rights violations
  • Riaa icons 56 Animal cruelty
  • Riaa icons 36 Armaments
  • Riaa icons 41 Alcohol
  • Riaa icons 42 Gambling
  • Riaa icons 55 Pornography
  • Riaa icons 45 Genetic engineering

Overview

The AMP Capital Sustainable Share Fund gives investors access to companies listed on the Australian Securities Exchange, with the objective of providing competitive returns and avoiding companies scoring poorly in Environmental, Social and Governance characteristics.


Description


The Sustainable Share Fund has been developed on the core belief that the assessment of intangible factors within the realm of environmental, social and governance considerations can have a meaningful impact on the operational and financial performance of a company. This belief is backed by extensive research conducted by AMP Capital and others across academia, NGO’s, Governments and industry bodies into the importance of considering non-financial factors when investing in a company. AMP Capital’s Sustainable Investments philosophy and related research may be found at http://www.ampcapital.com.au/about-us/esg-and-responsible-investment/esg-resources
  
The ESG Investment Research Team is responsible for the provision of proprietary sustainability research which is integral to the management of the Fund. Through the integration of sustainability research, the Fund invests in companies that are attractive in terms of their future earnings growth and are rated positively in terms of their assessed standing in relation to ESG factors. The Fund is also precluded from investing in companies that are rated non-investment grade within this framework.
  
AMP Capital was one of the first asset managers in Australia to integrate social and environmental factors into the financial assessment that is undertaken by Portfolio Managers, rather than simple screening. 
   
AMP Capital is an industry leader in terms of engaging companies on governance issues. AMP Capital’s activities in this area are well-publicised. Our Corporate Governance Policy and half-yearly Corporate Governance Updates are available on the company website (www.ampcapital.com.au) and further information is available on request. The Sustainable Fund’s constructive engagement process focuses particularly on corporate governance. This process is outlined below.
   
 
Specific Exclusions
 
The fund will not invest in companies with a material (10% of revenue) to:
•alcohol production and sales
•tobacco production and sales
•gambling production and provision
•pornography production and distribution
•armaments, including controversial weapons; and
•uranium mining and nuclear power
 
In addition, the fund excludes companies with a material exposure (20% of company value)
•thermal coal mining; and
•brown coal generation
 
In assessing companies in other sectors, we consider the sustainability risks and consider the ESG performance of the company, though consideration of a broad range of issues, including: OH&S, greenhouse gas emissions; environmental performance, employee and community relations and corporate governance.
 
 

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