Lonsec’s new sustainability research is now available on its leading iRate platform, enabling financial advisers to create portfolios that genuinely align with their clients’ values based on underlying asset holdings.
Funds covered by the research are issued with a Sustainability Score, which reflects the underlying investments of individual products and their compatibility with the United Nation’s 17 Sustainable Development Goals (SDGs). The research is provided in partnership with Sustainable Platform, a leading provider of sustainability data for investment managers and institutions.
“The concept of ESG as part of the investment selection process has been around for a long time, but there has been a distinct lack of clarity around what it really means for the end investor,” said Lonsec Research Executive Director Lorraine Robinson.
“Lonsec wants to bridge this understanding gap by offering research that looks past the process and directly analyses the assets and industries that investors are exposed to when they invest in a managed fund product. This is what investors ultimately care about.”
Lonsec believes the new research will enable financial advisers to better meet their clients’ investment needs and expectations, as well as help fulfil their best interest obligations.
“There is growing awareness among investors of the importance of considering sustainability issues when constructing a portfolio,” said Ms Robinson. “Advisers are now typically confronted with the question: ‘What am I really invested in?’ We want to help advisers not only answer this question, but to create a portfolio that is truly aligned to their client’s preferences.”
A Sustainability Report is issued for each fund that undergoes assessment. This is a two-page document detailing the relative success of the fund in supporting the United Nations Sustainability Goals, together with any exposure to the ten controversial industries.
The Lonsec Sustainability Score reflects the net impact of these measures, which is peer ranked and results in a score of between one and five bees.
The report also provides a snapshot of the environmental impact of the fund, as calculated using the Sustainable Platform data.
Many funds utilise negative screens and the Lonsec Sustainability Report details any industry exclusions imposed by the fund manager. The industry exclusions are the most common industry exclusions utilised by the funds rated by Lonsec.
Currently, Lonsec has issued a Sustainability Score to eleven funds previously covered within its Responsible Investment category. It will be progressively rolled out to additional funds as they nominate themselves for assessment.
“We are very excited to launch this initiative with the support of so many funds committed to sustainability and transparency,” said Ms Robinson.
“We’d really like to encourage as many funds as possible to join in this process to give investors the information and confidence they need to match their funds with their values.”