Mercer Socially Responsible Australian Shares Fund

Product Name

Mercer Socially Responsible Australian Shares Fund

Issuer

Mercer Investments (Australia) Limited

Category

Investment product

Type

Fund/Trust

Target

Retail, Wholesale

Certified Since

2018

Certification Symbol

SRI

Asset Classes

Equities - Australian only

Markets

Australia

Investment Approaches

Negative Screening, ESG Integration, Corporate Engagement - To have discussions with a company, usually at Board or senior management level, with the objective of changing the behaviour of that company. For more information please see Mercer’s Sustainable Investment Policy. Proxy voting - Mercer’s objective is to vote on all shares in its portfolio. For more information please see Mercer’s Sustainable Investment Policy.

It Includes

  • Riaa icons 11 More sustainable companies

It Excludes

  • Riaa icons 35 Tobacco
  • Riaa icons 36 Armaments
  • Riaa icons 41 Alcohol
  • Riaa icons 42 Gambling
  • Riaa icons 55 Pornography

Overview

The Mercer Socially Responsible Australian Shares Fund invests in Australian shares using a socially responsible and multi-manager approach. The fund aims to outperform the ASX300 over one year or greater and to achieve a return over the medium to longer term that is competitive with comparable funds that have similar risk characteristics. The fund also aims to achieve a carbon intensity that is 20% below the carbon intensity of the benchmark, as measured annually, while excluding investment in sectors that fail the social responsibility criteria.


Description


The Mercer Socially Responsible Australian Shares Fund (Fund) is a multi-manager fund that currently invests in two pooled investment funds and one investment mandate.  The Fund uses the same robust investment process (described below) to select the funds and investment managers for this Fund as the range of Mercer Multi-Manager Funds, with the addition of ethical and social responsibility screens.  The exclusion criteria applied to the Fund are as follows. 

The Fund will not invest in companies with material* exposure to:

  • Tobacco production
  • Alcohol production
  • Gambling or gaming services
  • Pornography 
  • Armaments

*Material exposure is defined as 5% of revenue or greater in the last full financial year.

In addition, the Fund will not invest in companies with material involvement in carbon intensive fossil fuels, namely thermal coal and tar / oil sands.  Material involvement is defined at 20% of revenue or greater from these carbon intensive fossil fuels in the last financial year.


Mercer tests the portfolio against the exclusion criteria using ESG data provided by MSCI ESG Research.

As per all of Mercer’s funds, the Fund incorporates Sustainable Investment, ESG and Corporate Governance considerations (such proxy voting and engagement in their investment decision making process) as per the Mercer Sustainable Investment Policy [https://www.multimanager.mercer.com.au/content/dam/mercer/attachments/asia-pacific/australia/investment/multi-manager/2018/mial-sustainable-investment-policy.pdf]  Additionally only managers with an ESG2 rating or above can be selected for inclusion in this Fund.    

Mercer Investment Process 
Mercer’s Australian-based multi-manager team leverages the global Mercer research network to establish optimal combinations of specialist managers for each Fund. Mercer’s investment manager research focuses on each manager’s strength in idea generation, portfolio construction, implementation and business management.  Mercer’s global manager research team also evaluates more than 5,000 investment manager strategies on their integration of ESG factors, and active ownership (voting and engagement) to determine an appropriate ESG rating.  This rating sits alongside the traditional investment ratings such as alpha ratings and is considered alongside all relevant factors. 

Prior to the appointment of an investment manager a detailed Operational Risk Assessment Report is prepared, which considers the risks associated with the investment mandate type, firm size, and significant third party or outsourced relationships, along with the mitigating or compensating controls that a firm may have to manage potential issues. 


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