Uranium Screen Retained
Recently HESTA reviewed the negative uranium screen on its Eco Pool investment option. Member input was sought and considering this and a number of other factors, the negative screen will remain on uranium for the Eco Pool. Therefore the HESTA Eco Pool will continue not to invest in companies which mine uranium.
Ecopool - A Quiet Revolution
Socially Responsible Investing (SRI) is generally defined as choosing an investment to achieve social and environmental as well as financial returns. It often involves using a 'screen' to exclude or include companies based on the investment objective.
Eco Pool was the first SRI option to be offered by a major industry super fund.
This exciting initiative allows your super to be invested in companies that demonstrate 'best of sector' environmental and sustainable performance, while still offering the potential for long term investment growth.
Like many investment options, Eco Pool invests in both Australian and international shares and Australian property. The big difference is that Eco Pool invests only in companies that have demonstrated superior environmental /sustainability practices within their industry sector, relative to their peers. Eco Pool is available as one of HESTA's member investment choice options.
How does Eco Pool invest?
Changes to Eco Pool's Strategic Asset Allocation (SAA)
As with other investment options, HESTA has a discretion to change Eco Pool's strategic asset allocation, as well as to alter its investments within each asset class, at any time.
From 1 July 2007, the SAA of Eco Pool changed to include a 10% allocation to Australian property investments that meet HESTA's SRI criteria. This is partly due to the completion of a commercial building at 50 Lonsdale street in Melbourne. Expected to earn 4.5 stars Australian Building Greenhouse Rating ("ABGR"), we believe the building presents an appropriate investment opportunity that allows HESTA to further diversify the asset mix in Eco Pool. Accordingly the SAA to Australian shares and international shares have each reduced by 5%.
Eco Pool is built upon a unique assessment system combining in-depth financial analysis and active environmental monitoring.
It currently invests 45% in Australian shares, 35% in International shares, 10% in Australian property and 10% in cash investments. The Australian shares component is selected via an environmental screen, while the International shares component screen incorporates economic, environmental and social criteria. Both screens are applied via a 'best of sector' approach (see below) .
Because 80% of this investment is in shares, it is likely to experience quite high volatility and there is the possibility that negative returns can be experienced. Over the long term, the return is expected to be comparable to HESTA's Core Pool return.
Enabling you to direct your super's investment to environmentally progressive companies can be a significant and growing incentive for large companies to respond positively to community demands for a safer, cleaner and more sustainable environmental management. So, by investing in Eco Pool, you acknowledge and reward companies that demonstrate they take our environment seriously.
What is the 'best of sector' approach?
Companies are classified according to industry sectors such as insurance, telecommunications and building materials. They are then evaluated and rated for environmental management / sustainability practices within their sector.
In conjunction with assessment for healthy financial performance, investments are made in the best-rated companies in each sector based on environmental/sustainability performance - hence the term 'best of sector'.
Eco Pool invests in several industry sectors to ensure diversification, which basically means 'not putting all your eggs in one basket'. So instead of excluding an entire industry, companies demonstrating superior performance within their sector are included. This acts as a positive incentive for companies to improve environmental performance. The only companies which are currently specifically excluded from the Australian shares sector are any companies which are involved in uranium mining. The international share process does not negatively screen out uranium mining companies but they do not currently hold them.