We believe the effective management of environmental, social and governance risks and opportunities will support our requirement to maximise returns.
Our Environmental, Social and Governance (ESG) Policy is consistent with our obligations under the Future Fund Act 2006, our investment mandates, investment beliefs, investment strategy and international best practice. We seek to provide a prudent and robust approach that is aligned to our overall objective.
We focus on those ESG factors that have the potential to materially impact the performance of our investment portfolio and/or our reputation. Relevant ESG factors vary by industry and across asset classes, but can include any of the following: occupational safety, human and labour rights, climate change, sustainable supply chain, corruption and bribery.
We focus on understanding the full spectrum of future risks and opportunities to which our portfolio is exposed, and invest accordingly.
Our approach, outlined in our ESG Policy, includes the evaluation of ESG factors in direct investments and integration of ESG into the process for selecting the external investment managers responsible for individual investment decisions.
We exercise the ownership rights associated with our investments according to our corporate governance voting principles, which are available in our ESG Policy.
A summary of the Future Fund Board of Guardians' proxy voting in Australian listed entities in 2017/18 is available here.
We also engage with key investee entities, either directly or in partnership with our investment managers, to promote enhanced ESG performance and establish a climate of long term asset stewardship.
Further information about how we integrate ESG risks and opportunities into the portfolio is available in our Annual Reports.
Our ESG Policy provides a framework which helps us to determine what entities and sectors are excluded from the investment portfolio for non-financial reasons.
In line with this, we have excluded entities on the basis of Australia’s international convention commitments or direct involvement in the manufacture of tobacco products.
The companies excluded from our portfolio under the Board's ESG Policy as at March 2018 are shown below.
Exclusions related to military weapons-related Conventions or Treaties ratified by Australia
- Ashot Ashkelon
- China Aerospace Science and Technology
- Larsen & Toubro
- Motovilikhinskive Zavody
- Norinco International
- S&T Dynamics
Exclusions related to the Board’s decision in respect of the primary manufacture of complete tobacco products
- Altria Group
- British American Tobacco
- Bulgartabac Holding AD
- Eastern Company S.A.E
- Godfrey Phillips India
- Gudang Garam
- Imperial Tobacco Group
- Japan Tobacco
- Karelia Tobacco Company
- Philip Morris International
- Reynolds American
- Shanghai Industrial Holdings
- Swedish Match
- Vector Group
- VST Industries