BetaShares has launched a new ethical ETF, giving investors access to a portfolio of the sustainable, ethical Australian companies in one simple trade on the ASX.
The BetaShares Australian Sustainability Leaders ETF (ASX: FAIR) provides exposure to a diversified portfolio of 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.
Due to the broad exclusion screens utilised and the rules which focus the fund on sustainable businesses, FAIR provides one of the few ‘true-to-label’ ethical investment options focused on Australian shares available on the ASX.
BetaShares’ Managing Director, Alex Vynokur, says: “Demand for sustainable investing products is on the rise in Australia. More and more investors, especially younger Australians, are conscious about where their money goes and what kind of business activities they support. What started as a niche area for not-for-profit investors and religious groups has now evolved into a strong and positive trend of increased consciousness regarding financial investments. We believe responsible investing will only continue to gain relevance.”
The launch of FAIR follows the introduction in the Australian market of the BetaShares Global Sustainability Leaders ETF (ASX: ETHI) in January 2017, which provides access to a portfolio of global companies (ex-Australia) which are similarly ethically-responsible and leaders in sustainability.
“Given the success we have had with ETHI, the launch of FAIR was a natural progression. We have had significant demand from clients for a ‘true-to-label’ sustainable product for Australian equities. For example, due to the impact of the broad-ranging methodology used by FAIR, its portfolio excludes the majority of mining stocks, including BHP and RIO, as well as the big four banks,” says Vynokur.
Using an initial anti-fossil fuel screen, FAIR removes companies directly involved in the fossil fuel industry and those with a high use of fossil fuels. The screening criteria also removes companies exposed to other activities posing significant environmental, social and governance (ESG) risks.
These ESG criteria filter out several business activities including: gambling, tobacco, armaments, uranium and nuclear energy, destruction of valuable environments, animal cruelty, chemicals of concern, mandatory detention of asylum seekers, alcohol, junk foods, pornography, human rights and supply chain concerns, and payday lending.
Importantly, the unique fund methodology also introduces a gender diversity screen, which requires a requisite level of gender diversity at the board level of the companies included in the portfolio.
Once past the anti-fossil fuel and ESG screens, the Fund’s methodology preferences companies classified as “Sustainability Leaders” due to their involvement in sustainable business activities. Such activities include: renewable energy, water efficiency, recycling, waste remediation and re-use of materials, education, healthcare, animal health, healthy foods and nutrition products, and green star rated buildings, amongst others.
According to a recent consumer survey commissioned by the Responsible Investment Association Australasia (RIAA), 9 in 10 Australians expect their investments to be invested responsibly and ethically. Moreover, 4 in 5 Australians would consider switching products if their current funds engaged in activities inconsistent with their values.
“The launch of FAIR illustrates BetaShares’ commitment to providing cost-effective tools for those investors focused on responsible investment. We expect to continue to grow our presence in this space with the launch of additional products in the future,” says Vynokur.