Alex Vynokur

BetaShares, a leading Australian ETF provider, has had its Australian Sustainability Leaders ETF (ASX: FAIR) recognised by Australia’s leading, independent certifier of responsible investments, the Responsible Investment Association Australasia (RIAA) certification program.

Developed in 2005, the program was established to help investors navigate their way through the financial services landscape, to easily identify investment products that match their investment values and their beliefs.

As part of the certification process, BetaShares demonstrated that investors are given access to detailed information about how the Fund takes into account Environmental, Social and Governance (ESG) and ethical issues in the investment process.

Commenting on the certification, BetaShares Chief Executive Officer, Alex Vynokur, said: “We are delighted to have our second ethical product, FAIR, recognised by the RIAA certification program.

“The program has been valuable in helping Australian investors make confident decisions about accessing transparent, sustainable options in Australia.”

Ethical screens and sustainability leadership

Launched in December 2017, FAIR provides access to a diversified portfolio of sustainable, ethical Australian companies in a single ASX trade.

FAIR’s strict screening process combines a positive climate leadership screen, with a broad set of ESG criteria to ensure investors are accessing a ‘true to label’ portfolio of ethically-focused Australian companies.

The screening process includes the removal of companies involved in the fossil fuel industry (including indirect activity, such as funding fossil fuel projects).  Companies exposed to other negative ESG activities, including gambling, tobacco, armaments, junk foods and payday lending, are also removed.

Remaining companies with involvement in sustainable business activities such as renewable energy, water efficiency, recycling, education, healthcare and animal health, among others, are prioritised in the portfolio.

Adding further diversification for investors, as a result of the screening process, FAIR does not invest in any of the “big 4 banks” or large Australian mining companies.

Importance of gender diversity in investing

Importantly, FAIR applies a unique gender diversity screen not applied by any other investment product in Australia. The gender diversity screen requires a minimum level of female representation at a company’s board level.

Regardless of a company’s ability to pass the previous screens, should they lack this requirement they will be excluded as part of the fund’s screening.

According to the latest Australian Institute of Company Directors Gender Diversity Report, while there has been marked improvement in gender diversity in recent years, there are still 13 of the largest 200 Australian companies on the ASX with no female director.^[1]

The growing demand for ‘green’

Mr Vynokur said there had been strong uptake in FAIR since its launch just over 3 months ago, with assets in the fund approaching $100m as at end March 2018.

“Demand for sustainable investing products is on the rise in Australia. Many investors, and particularly millennial Australians, are prioritising the importance of environmental, social and governance (ESG) issues in their investment decision making.

“We believe responsible investment will only continue to gain relevance in our local market,” Mr Vynokur said.

 [1] Source: Australian Institute of Company Directors 2017 report

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