The Trust provides exposure to a high conviction portfolio of international equities subject to U Ethical’s ethical investment policy. Each company must attain a minimum environmental, social and governance (ESG) rating, while the overall portfolio must attain a minimum alignment to United Nations Sustainable Development Goals (SDGs). Financial evaluation is focussed on quality and value.
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, ESG integration, alignment with the United Nations’ Sustainable Development Goals and engagement with companies—together with a focus on competitive economic returns and sustainability.
Our positive screening seeks out companies that promote human welfare and dignity or environmental sustainability. Examples include companies producing goods or services that enhance the health and welfare of individuals and communities as well as companies producing goods or services that protect our environment. We screen positively for sectors such as:
• Clean energy and technology
• Sustainable agriculture
• Circular economy
• Community and education services
• Health care.
Our negative screening evaluates a company’s products, services and practices to ensure they are not detrimental to society or the environment. 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; and/or
• have unacceptable occupational health and safety practices.
Our screening approach means we systematically exclude the following industries due to their inherent negative impacts:
• Fossil fuels (coal, oil & gas)
• Uranium mining and nuclear
• Defence and weapons (civilian, conventional and controversial weapons)
• Predatory lending
• Adult entertainment
• Animal cruelty
• Alcohol production
• Tobacco production.
However, we recognise that there are occasions when companies inadvertently violate these principles and make genuine efforts to rectify this. Furthermore, we generally do not exclude a company where a contravention of the principles constitutes less than 5% of the company’s revenue or earnings. In such instances, the contravention may be outweighed by significantly positive factors.