FAIR provides simple, cost-effective and transparent exposure to a portfolio of sustainable, ethical Australian companies. The Fund owns stocks that have passed eligibility screens designed to exclude companies with direct or significant exposure to the fossil fuel industry or engaged in other activities deemed inconsistent with responsible investment considerations. The Fund’s methodology also preferences companies classified as “Sustainability Leaders” due to their involvement in sustainable business activities.
Traditionally, the ethical and ESG investment funds available to Australian investors have been largely focused on small and mid-cap stocks, often with significant overweights to clean tech and clean energy stocks. For those investors seeking a broadly diversified global portfolio, such a portfolio can lead heavy reliance on the ability of fund managers to pick stocks in what has been historically a volatile sector. By contrast, FAIR provides simple, cost-effective and transparent exposure to a portfolio of sustainable, ethical Australian companies. By contrast to unlisted funds, it offers no minimum investment levels and the ability to trade intraday as simply as buying any share on the ASX.
FAIR focuses on:
a) A wide range of ESG screens - Excludes companies that have direct or significant exposure to the fossil fuel industry and those that are engaged in other activities deemed inconsistent with responsible investment considerations
a) “Sustainability Leaders” due to their involvement in sustainable business activities.
FAIR aims to track the performance of an index (before fees and expenses) that provides exposure to Australian companies that have been screened to preference companies engaged in sustainable business activities and to avoid companies engaged in activities deemed inconsistent with responsible investment considerations.
From the universe of eligible ASX listed securities, the Index methodology removes companies which are exposed to activities considered to carry significant negative environmental, social and governance (ESG) risks, including:
- Fossil Fuels – including any direct and any material indirect exposure + any companies with high use of fossil fuels
- Uranium and nuclear energy
- Destruction of valuable environments
- Animal cruelty
- Chemicals of concern
- Mandatory detention of asylum seekers
- Junk foods
- Human rights and supply chain concerns
- Lack of gender diversity at the board level
- Payday lending
From the companies passing the above screens, the Index preferences companies classified as “Sustainability Leaders”, which means that the company must satisfy at least one of the following criteria:
- More than 20% revenue derived from one or more of the following: renewable energy; energy efficiency; water efficiency; recycling; waste remediation and re-use of materials; public transport and energy efficient transport; education; healthcare; animal health; healthy foods and nutrition products; green star rated buildings; community and regional banking; health insurance and personal insurance; social services and social infrastructure (e.g. employment services, child care); sustainability certified products and services (e.g. Fairtrade, certified organic); sustainable forestry; access to knowledge and information; access to communications;
- Recipient of either an “A” or “B” grade (or equivalent) rating from a trusted ethical consumer report;
- Certified B Corporation (a certification issued by B Lab, which is available to companies that meet specified governance, transparency, environmental and social impact standards).
Note that not every security in the Index is necessarily a Sustainability Leader (but every security will have met the above Screening Criteria). The Index uses a modified market capitalisation weighting method, includes sector concentration limits, gives preferential weighting to Sustainability Leaders, and applies a maximum weight per security of 4% at each annual rebalance date. For more information on the Index see the Index methodology document available on our website