Pendal Sustainable International Share Fund

Product Name

Pendal Sustainable International Share Fund

Issuer

Pendal Group

Category

Investment

Type

Fund or Trust

Target

Wholesale, Institutional

Certified Since

2017

Asset Classes

International equities

Markets

Australia

Investment Approaches

Best in class screening, Negative Screening

It Includes:

  • Riaa icons 32 Green property
  • Riaa icons 12 Healthcare and medical products
  • Riaa icons 10 Renewable energy and climate change solutions
  • Riaa icons 15 Social and sustainable infrastructure

It fully excludes:

  • Riaa icons 41 Alcohol
  • Riaa icons 36 Armaments
  • Riaa icons 33 Fossil fuels
  • Riaa icons 42 Gambling
  • Riaa icons 52 Human rights abuses
  • Riaa icons 99 Pornography
  • Riaa icons 35 Tobacco

Overview

The Fund uses an active security selection process that combines sustainable and ethical criteria with financial analysis. The Fund actively seeks exposure to securities and industries that demonstrate leading ESG and ethical practices consistent with Pendal’s sustainability criteria while avoiding exposure to companies with activities that we consider to negatively impact the environment or society. The sustainable and ethical criteria employed include factors such as: • environmental issues, • social practices, • corporate governance, and • ethical practices. The Fund applies a sustainability methodology which assesses the degree to which a company is exposed to, and how well it manages its exposure to, a range of ESG issues. Specifically, the process excludes companies with the lowest scores. By incorporating ESG-related factors as an input into the multi-factor stock selection approach, the portfolio is able favour companies that score better across all factors on average. As the investment manager for the Fund, AQR’s investment process is based on their quantitative investment strategies and aims to add value through active stock and industry selection and investment research. AQR employs a systematic investment process to maintain a highly diversified and risk controlled portfolio. The Fund’s multi-factor approach combines bottom-up security and industry selection decisions to generate excess returns. The process relies on proprietary stock selection models, which utilize a set of valuation, momentum, earnings quality, investor sentiment, stability and management quality signaling factors to generate views on stocks. The Fund has assets that are denominated in foreign currencies. This means that changes to the Australian dollar relative to foreign currencies may affect the value of the assets of the Fund. Generally, these currency exposures will not be hedged to the Australian dollar. Derivatives may be used to reduce risk and can act as a hedge against adverse movements in a particular market and/or in the underlying assets. Derivatives can also be used to gain exposure to assets and markets. Active ownership practices Consistent with the Fund’s focus on sustainable and ethical investments, the Fund’s proxy voting policy generally supports shareholder proposals advocating ESG related activities including proposals advocating enhanced disclosure and transparency. Sustainable and ethical assessment process The Fund invests in the securities that are considered to meet the Fund’s sustainable and ethical criteria. Specifically, the assessment process may consider issues such as: Environmental Management • Management of environmental impacts through the implementation of best practice environmental techniques, technologies and product design • Environmental performance against a range of environmental indicators including for example, greenhouse gas emissions, energy and water use and environmental incidents • The capacity to consult key stakeholders in relation to activities that may have significant environmental impacts • Adoption of best practice with regards to management and disclosure of material risks and opportunities associated with climate change. Social practices • Equal opportunity, anti-discrimination and industrial relations policies and practices • Staff incentives, development and training • Employee benefits and entitlements • Human capital management performance against a range of indicators, such as voluntary turnover and gender diversity in senior management • Products or services that provide positive social impacts such as improved health & community well-being, disease prevention, and education • Management of contractors and suppliers • Workplace health and safety performance against indicators such as fatalities and lost time injury frequency rate. Corporate governance and business conduct • Codes of conduct and the extent of their integration into the company’s operations • Provision of regular and appropriate training • Whistleblower policies and procedures • Ethical conduct and performance of employees and officers - the extent to which companies are adopting principles in areas such as complying with the law, fair and open dealings and accepting responsibility for their actions • Product safety and consumer protection • Engagement practices with employees, shareholders and key community stakeholders The Fund will not invest in companies with material business involvement in the following activities: • production of tobacco or alcohol, • manufacture or provision of gaming facilities, • manufacture of weapons or armaments, • manufacture or distribution of pornography, • directly mine uranium for the purpose of weapons manufacturing, • extraction of thermal coal and oil sands production. We consider that a company has a material business involvement in an activity if 10% or more of its total revenue is derived from that activity. Pendal actively engages with the management of the companies we invest in to manage risk, effect change and realise potential value over the long term. Investments are reviewed regularly to ensure they remain within guidelines relating to sustainable and ethical considerations. If the review process identifies that an investment ceases to comply with the investment guidelines of the Fund, the investment will usually be sold as soon as reasonably practicable having regard to the interest of the investors, but this may vary on a case by case basis. The criteria applied to the Fund’s investments may exclude some industry sectors or companies from the Fund’s ‘investable universe’. For this reason the Fund’s performance may vary when compared to other funds that do not apply sustainable screens in their investment process. This risk should be considered when deciding whether to invest in the Fund.


Description


Investing in this fund provides exposure to companies assessed as demonstrating and or/offering leading environmental and social practices, products and services, whilst avoiding companies that do not meet the Fund’s ethical guidelines.
 
 The Fund will not invest in companies with material business involvement in the following activities:
  • the production of tobacco or alcohol,
  • manufacture or provision of gaming facilities,
  • manufacture of weapons or armaments,
  • manufacture or distribution of pornography,
  • directly mine uranium for the purpose of weapons manufacturing,
  • extraction of thermal coal and oil sands production.
We consider that a company has a material business involvement in an activity if 10% or more of its total revenue is derived from that activity.
 
Positive screening means that we actively seek investments in industries and companies assessed as demonstrating and/or offering leading environmental and social practices, products or services. 

 Leading Industries
 Industries offering products and services that provide a direct benefit to social and/or environmental outcomes such as: 
  • Environmental management or remediation
  • Environmental technologies
  • Energy efficiency and renewable energy
  • Low-impact products or products that reduce ecological footprint
  • Sustainable buildings and property development
  • Sustainable land use and food production
  • Improved health and community wellbeing

Other products certified by the Responsible Investment Association Australasia (RIAA)

Pendal Sustainable Australian Fixed Interest Fund

Pendal Sustainable International Fixed Interest Fund

Pendal Sustainable Future Australian Share Portfolio

Pendal Sustainable Australian Share Fund

Pendal Sustainable Balanced Fund

Pendal Sustainable Conservative Fund

Pendal Ethical Share Fund

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