DBBF is built using BetaShares’ true-to-label, RIAA-certified ethical ETFs – which combine positive climate leadership screens with a broad set of ESG criteria. DBBF provides exposure to a passive blending of asset classes, including Australian and global shares and bonds, according to its strategic asset allocation.
ESG considerations are taken into account in two stages of the investment process:
• Negative Screening: screens are applied to all companies (or issuers for GBND) in accordance with the detailed rules set out in the relevant index methodology. Most commonly, screens are based on the proportion of a company’s revenue derived from certain non-sustainable activities/products. For example, companies that derive more than 20% of their revenue from alcohol are excluded from FAIR.
• Positive Screening -- Identification of Sustainability/Climate Leaders and Green Bonds: in addition to these negative screens applied, the BetaShares Sustainability Suite of Funds aims to invest in securities that have an actively positive impact on the environment and society. Each Fund has a slightly different positive screening process, reflecting different characteristics of the asset classes. For example, ETHI defines a ‘Climate Leader’ as a company that has a carbon efficiency that places it in the top one-third of companies in its industry (where carbon efficiency is measured by greenhouse gas emissions from a company’s operations, fuel use and supply chain, divided by its annual revenues) or is otherwise a superior performer on Scope 4 carbon emissions (also known as “avoided emissions”). Within FAIR, the positive screen has a broader focus than carbon efficiency, due to the much smaller universe of ASX-listed stocks, and the lack of carbon data outside the largest ASX-listed companies. The index methodology for FAIR identifies “Sustainability Leaders” from the universe of eligible securities, being companies that earn more than 20% of their revenues from a defined list of activities that include renewable energy, energy efficiency green-star rated buildings, education, healthcare, health and personal insurance, etc. Finally, the positive screening in GBND is to select green bonds identified by the Climate Bond Initiative (CBI).
RIAA is aware that BetaShares has not yet disclosed the activities and outcomes of the fund’s stewardship activities in line with the Responsible Investment Standard. RIAA has certified DBBF based on BetaShares’ formal commitment to disclose stewardship activities and outcomes within an agreed timeframe.