The Fund is designed for investors who want the potential for long term capital growth from a high conviction, values-oriented, concentrated portfolio of typically 15-35 stocks that invests in businesses that in our view, in aggregate, provide a net benefit to Australia’s future economy and society.
We adopt a principles-based approach in identifying the Fund’s investments which aims to:
- Avoid companies whose industries, business models and products or services are not sustainable or cause significant harm, having regard to what we believe most investors would want to avoid in a values-based investment portfolio.
- Invest in companies that demonstrate, or offer or enable more sustainable practices, business models or products and services.
- Invest in companies that advance or participate in the transition of the Australian economy to one that is more sustainable.
- Engage with management of companies in which we invest to manage risk, effect change and realise potential value over the long term.
In managing the Fund, we avoid investing in companies which:
- directly undertake fossil fuel exploration or extraction (specifically, coal, oil and gas); or
- earn more than 10% of their revenue from fossil fuel-based power generation, or from fossil fuel refinement or distribution (coal, oil and gas); or
- earn more than 10% of their revenue from the provision of supplies or services which relate specifically to the fossil fuel exploration or production industries
(coal, oil and gas)
- directly undertake uranium mining for weapons or power generation; or
- earn more than 10% of their revenue from nuclear energy-based power generation
- earn more than 10% of their revenue from unsustainable forestry or forest products, including non-Forest Stewardship Council certified forest products or non-Roundtable on Sustainable Palm Oil certified palm oil production
- directly manufacture, own or operate gambling facilities, gaming services or other forms of wagering; or
- earn more than 10% of their revenue from the indirect provision of gambling (for example, through telecommunications platforms)
- produce pornography; or
- earn more than 10% of their revenue from the distribution or retailing of pornography
- produce or distribute controversial weapons (such as cluster munitions, landmines, biological and chemical weapons), or supply goods or services specifically relating to controversial weapons; or
- produce or distribute non-controversial weapons or military equipment; or
- produce or distribute civilian firearms, or supply goods or services specifically related to firearms to firearm manufacturers
- produce alcoholic beverages; or
- earn more than 10% of their revenue from the distribution or retailing of alcoholic beverages
- produce tobacco (including e-cigarettes and inhalers); or
- earn more than 10% of their revenue from the distribution of tobacco (including e-cigarettes and inhalers) or supply of goods or services specifically related to the tobacco industry (for example, packaging or promotion)
- directly undertake animal testing for cosmetic products
Predatory Lending Practices
- directly provide products or services with lending practices that are unfair or deceptive to ordinary borrowers, including small amount short term loans at higher than commercial rates of interest (for example, payday loans, pawn loans or the use of aggressive sales tactics)
- we consider to have been found to have significant breaches of social or environmental norms or regulations, or are subject to serious and substantiated allegations of unethical conduct, which we consider have not been remedied or adequately addressed.
Sustainable industries and companies
Alongside core investments, we seek to invest in companies that demonstrate, or offer or enable more sustainable practices, business models or products and services, as well as companies that advance or participate in the transition of the Australian economy to one that is more sustainable.
To that end, we seek to allocate capital to companies which directly contribute to, or enable others to contribute to, areas such as:
- Innovation and technological advances
- More sustainable resource consumption and production, including decarbonisation
- Supply chain resilience
- Sustainable and resilient infrastructure
- Quality education
- Provision of decent work
- Health and wellbeing
- Social inclusion and diversity
- Meeting basic needs
- Low carbon transportation
Please note, this Fund changed its name from the Pendal Ethical Share Fund to the Pendal Horizon Fund on 15 March 2021.