Responsible investing is no longer just a trend. Here, we explore how Colonial First State has begun taking action to become a more responsible investor.
Over time, our members have been telling us that it is important to them that their investments are managed in a sustainable and responsible way – and we couldn’t agree more.
As part of our ongoing commitment to improving long-term member outcomes, our investments team has been working hard to more effectively align the investment process with members’ expectations.
You may be aware that one step we’ve taken to become a more responsible investor is the divestment of holdings in companies associated with the production of tobacco and controversial weapons – meaning we no longer hold investments or invest members’ funds into companies of this nature.
Why tobacco and controversial weapons?
Tobacco production poses many environmental, social and economic risks, is a contributor to modern slavery and is a large user of child labour – with an estimated 1.3 million children1 working in this sector in 2011. By the end of last year, we ensured our portfolios no longer invested in companies that produce tobacco and tobacco products.
Controversial weapons, which are at the extreme end of weapons manufacturing, can be defined as having the capacity to indiscriminately kill or disproportionately harm people relative to ‘normal’ military practices. They may kill civilians as well as military targets even after conflict has ended – thus their use is prohibited and breaches all global conventions on human rights. Our investment managers have had very little exposure to manufacturers of controversial weapons previously, but by the end of 2019, we no longer allowed them to invest in these companies.
How do we decide if an exclusion is required?
While responsible investing involves more than simply applying a negative screen or excluding investment holdings, these measures still play an important role in the decision-making process.
In short, when assessing an investment for exclusion, our team uses a framework of questions that help to better understand the nature of an investment, the possible risks it poses and whether there are alternatives to exclusion. Decisions are not made lightly, and can also involve us engaging with investment managers to understand the possible impacts on portfolios.
Ultimately, our members’ and investors’ best interests lie at the heart of our decision-making – so we must first ensure that the option they’re invested in remains adequately diversified, with investment objectives that can still be met to achieve long-term wealth creation and protection. As we work with you to help improve the wealth of our members, it is our aim to continue communicating with our advisers about any significant changes to our investment options.
Want more information?
ESG considerations have become more important to our members and investors than ever before – and understanding their needs is important to us.
We recently updated our website to include insights on our journey, beliefs and approach to responsible investing, as well as our understanding of climate change and modern slavery. Please visit the website or contact our team for a better understanding of the responsible investment ethos which is influenced by our customers and which underpins the Colonial First State investment process.
1 UN International Labour Organisation 2011
Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (Colonial First State) is the issuer of super, pension and investment products. This document may include general advice but does not take into account your individual objectives, financial situation or needs. You should read the relevant Product Disclosure Statement (PDS) and Financial Services Guide (FSG) carefully, assess whether the information is appropriate for you, and consider talking to a financial adviser before making an investment decision. The PDS and FSG can be obtained from colonialfirststate.com.au or by calling us on 13 13 36.
Climate change and what it may mean for our investments
Our journey to become a more responsible investor began in 2015, and intends to place us in a better position to understand and manage risks. These risks to our investments include Environmental, Social and Governance (ESG) risks, as well as climate change risks and opportunities.
Adviser use only
Unless otherwise specified, this document has been prepared by Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State) based on its understanding of current regulatory requirements and laws as at the date of publication. While all care has been taken in the preparation of this document (using sources believed to be reliable and accurate), to the maximum extent permitted by law, no person including Colonial First State or any member of the Commonwealth Bank group of companies, accepts responsibility for any loss suffered by any person arising from reliance on this information. Colonial First State is the issuer of interests in FirstChoice Personal Super, FirstChoice Wholesale Personal Super, FirstChoice Pension, FirstChoice Wholesale Pension, FirstChoice Employer Super offered from the Colonial First State FirstChoice Superannuation Trust ABN 26 458 298 557. It also issues interests in the Rollover & Superannuation Fund (ROSCO) and Personal Pension Plan (PPP) offered from the Colonial First State Rollover & Superannuation Fund ABN 88 854 638 840. Colonial First State also issues other investment products made available under FirstChoice Investments and FirstChoice Wholesale Investments, other than FirstRate Saver, FirstRate Term Deposits and FirstRate Investment Deposits which are products of the Commonwealth Bank of Australia ABN 48 123 123 124, AFS Licence 234945 (the Bank). Colonial First State is a wholly owned subsidiary of the Bank. The Bank and its subsidiaries do not guarantee the performance of FirstChoice products or the repayment of capital from any investments. This document provides information for the adviser only and is not to be handed on to any investor. It does not take into account any person’s individual objectives, financial situation or needs. You should read the relevant Product Disclosure Statement (PDS) before making any recommendations to a client. Clients should read the PDS before making an investment decision and consider talking to a financial adviser. PDSs can be obtained from colonialfirststate.com.au or by calling us on 13 18 36.
From time to time, Colonial First State enters into alliance partnerships with dedicated and experienced investment specialists. Each alliance represents an agreement for Colonial First State to provide third party distribution services within the Australian Financial Services intermediary market.
Past performance is no indication of future performance.
Stocks and investment options mentioned are for illustrative purposes only and are not recommendations to any person to buy sell or hold these stocks.
Taxation considerations are general and based on present taxation laws and may be subject to change. Clients should seek independent, professional tax advice before making any decision based on this information. Colonial First State is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and clients should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.