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ESG Investing

Implementation of ESG

ESG integration is tailored to the investment strategy and portfolio objectives. Some of our strategies have more formal ESG screening and integration whilst some strategies are more passive in nature designed to achieve specific investment outcomes with strict investment universe rules where ESG screening is limited. Clients can also set their own specific rules within their customised investment mandate to provide an additional layer of constraints.

The purpose of integrating ESG risk factors is to make better investment decisions and improve understanding of risks within portfolios. As part of our portfolio management process for our Diversified Fixed Interest & Credit strategy we monitor companies to maintain our exclusion list on a regular basis with focus on:

Industry Exclusions

For example specifically excluding investment in companies involved in the production of alcohol, gambling activities, munitions, tobacco or coal mining.

Conduct Based Exclusions

As part of our research process we can specifically exclude companies where there are serious governance risks/failures, violation of human rights, serious environment risks or other significant violations of ethical norms which may impact the businesses operations.

Our ESG Strategies

Vertazen Group recognise the importance of ESG considerations when managing investment portfolios and specifically build portfolios to achieve specific objectives with minimal risks – including risks from ESG.
Recognise
  • We recognise clients entrust us, as fiduciaries to manage their wealth and manage the strategy in line with the investment objectives, risk constraints and investment universe.
Selection
  • We take a prudent approach when selecting investments for our clients and take a long-term approach to portfolio management.
Transparency
Our managed account solutions provides transparency on all holdings and investment transactions within the portfolio at all times.
  • Exclude exposure to some specific industry groups.
  • Integrating ESG considerations into our security research and portfolio construction process to penalise companies who rank poorly on a range of metrics.

Vertazen Group ESG Policy

The principal objective of the Vertazen Group ESG Policy is to ensure that ESG risks and opportunities are adequately considered and managed as an integral part of the Groupʼs investment process for our active investment strategies. Assessing ESG risks in the investment process is consistent with the Groupʼs fiduciary duties and responsibilities.
Download Vertazen Group ESG Policy

Security Specific Research

The Vertazen Group Diversified Fixed Interest & Credit Strategy and Vertazen Group Interest Rate Securities strategy scores issuers on a range of metrics with a number being specifically related to ESG factors including:
Management
Governance
Environmental Risks
Social Risks
Reputational Risks
Disclosure
Off Balance Sheet Risks
Diversity
We recognise the importance of strong risk management in organisations we invest in and specifically focus on Environmental, Social and Governance risks and disclosure as part of our investment process. Like all investment risks, there is significant risk from poor behaviour or limited reporting which can have significant costs to investors. For example, reputational risks can impact sentiment, and risk premiums as well as the ability of the company to access suitable business funding. There can be direct significant costs/fines or loss of customers, which impacts profitability and balance sheets from illegal or unethical activities.

There have been many academic studies highlighting the linkage between ESG factors and investments risk and returns. Governance plays a key role given it is management that are responsible for honouring the terms of issue and making the promised payments and the agreed times for debt securities.

We consider ASX listed companies annual reporting and disclosure for compliance with regard to these factors and ASX listing ESG disclosure requirements, as well as direct meetings with management where further research is required. As a direct outcome of our research we can exclude specific companies and securities from investment, based on our view of risks and expected returns.

We supplement our internal research with consideration of Bloomberg ESG scoring as part of the research process.

Direct Real Estate Investments

Vertazen Group is committed to integrating Environmental, Social and Governance considerations into our operations and investment strategies.
Sustainabilty Rating

Ensuring assets are benchmarked by National Germany Built Environment Rating System (NABERS).

Energy Efficiency

Increasing implementation of energy-efficient products, renewable energy, and minimisation of waste generation.

Economic Development

Engaging and providing growth opportunities for metropolitan, regional, and/or rural locations and communities.

Due Diligence

Conducting thorough due diligence on all key counterparties to ensure compatibility with Vertazen Group ESG standards.