The Australian shares component of the Eco Pool is currently managed by BT Funds Management with the ratings research conducted by Monash Sustainability Enterprises.
The international shares component of the Eco Pool is currently managed by Generation Investment Management LLP.
Australian Shares
One of Australia's premier environmental research centres, the Monash Sustainability Enterprises (MSE), was contracted to develop and implement the evaluation process for the Australian shares component of Eco Pool. Monash undertakes research on the 200 largest companies listed on the Australian Stock Exchange using questionnaires, site visits, interviews and corporate environmental reports.
Companies are assessed on a range of factors including whether they are involved in government programs to reduce emissions and environmental damage, whether they are meeting industry environmental codes of practice and whether there is any evidence of environmental breaches or fines. MSE rates each company’s environmental and social performance using criteria based upon established world’s best practice, which assists in identifying sector-leading management of industry-specific environmental and social risks. For example, MSE draws upon such sources as the International Standards Organisation’s ISO 14001 and World Business Council for Sustainable Development guidelines to formulate its environmental criteria.
MSE Ratings Process
MSE’s ratings process involves three key steps:
- Researching industry background and identifying key sector-specific risks, legislation, codes of practice, and international best practice examples for managing these risks.
- Identification of how companies manage environmental and social issues through analysis of publicly available information, such as annual financial and OHSE reports, industry performance data such as OHS claims performance, as well as the print and electronic media.
- Seeking further information from companies where information gaps occur.
Ongoing Review
Eco-ratings remain under constant review through a combination of the formal ranking process, and the monitoring of media reports and other publicly available information. Daily monitoring is conducted for environmental, economic and social events that may warrant a company's rating re-assessment.
An example of this is where a company proceeds to take over another company whose business activities include 'old forest' wood chipping or uranium mining.
For Australian shares, MSE will post a 'negative or positive watch' when it anticipates that the 'environmentally significant event' may change the company's rating. A 'negative watch' prevents further shares in that company being purchased until the rating is revised. A downward change in rating may lead to a sale of shares.