Socially responsible investments

Investors are becoming increasingly aware of the inherent link between a company’s commitment to sustainable practices and its long term profitability and access to lower cost of capital. BT Investment Management’s SRI team seek opportunities to invest in companies that implement and display sustainable principles into their business strategies. BT IM offers a range of Socially Responsible Investments (SRI), including Australian and international share funds and diversified ethical funds.

BT IM, together with Monash Sustainability Enterprises (MSE), are pioneers and leaders in SRI in Australia. BT IM uses its Australian equity investment expertise to construct portfolios of share investments with the environmental and social criteria provided by MSE. MSE is a global leader in assessing, rating and engaging companies on sustainable development. MSE has designed and developed a proprietary assessment framework for BT IM which it uses to rate S&P/ASX 200 companies.

Two approaches to SRI

BT IM offers two investment strategies in socially responsible investing: Sustainability and Ethical. The table below summarises the key aspects of these different approaches.

  Sustainability Ethical
Stock
selection		 Bottom-up, all major
industry sectors
represented		 Bottom-up, some industry
sectors not represented
Portfolio
construction		 Disciplined process
including social,
environmental and financial
criteria		 Core BT Australian Equities
portfolio construction
process with ethical overlay
Ethical
preferences		 Generally no specified
exclusions – not
setting personal ethical
preferences		 Avoid or promote certain
areas – aligning personal
or institutional values with
investments
Rewarding
companies		 Rewards ‘best’ companies
across all sectors
– encourages all sectors to
improve		 Positive screens promote
certain areas of investment

BT IM’s sustainability funds use a best-of-sector approach which is suitable for investors seeking a low-risk, quantitative approach to portfolio construction; the Ethical or positive and negative screening approach is suitable for those investors who wish to actively avoid or favour certain areas of investment, usually aligning with their core beliefs and values.

BT IM has a strong track record in sustainable investing and continues to be an industry leader in this increasingly important area of investment management:

  • In 2005, BT Financial Group’s SRI Funds were awarded the SRI Symbol by the Ethical Investment Association (EIA). The SRI Symbol program was developed in response to investor requests for help in making informed choices regarding investment funds that take into account environmental, social and ethical considerations as well as financial returns. BT is a founding member and maintains an active role on the board of the EIA
  • In 2004, BT was awarded Ethical Fund of the Year by Ethical Investor Magazine. The criteria of the award included the financial performance of the fund, the sustainability credentials of the companies held by the fund and the overall commitment to corporate social responsibility by Westpac, BT & BT IM
  • BT is a founding member of the Australia and New Zealand chapter of the Investors Group on Climate Change (IGCC)
  • BT is a signatory to the Carbon Disclosure Project (CDP)
  • BT was one of the six founding signatories on the United Nations Environment Program Finance Initiatives (UNEPfi) in the early 1990s (now more than 250 signatories worldwide)
  • In 1999, BT pioneered the best of sector process in Australia with the launch of Westpac Australian Eco Share Fund in conjunction with Monash Sustainability Enterprises
  • BT was also the first Australian licensee of the world’s most recognised sustainability measure, the Dow Jones Sustainability Group Index, for Westpac International Sustainability Share Fund (BT International Sustainability Share Fund)
  • BT worked with MSE to develop the first comprehensive environmental and social ratings assessment process in Australia for the Westpac Australian Sustainability Share Fund (2001) (now named BT Institutional Australian Sustainability Share Fund).