What is impact investing?
Investments are focused on companies, organisations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return.
What do we currently invest in?
No single asset or project will represent more than around 3% of the total portfolio. Compared to our standard managed choice options, the PositiveIMPACT option will have a narrower set of underlying investments, but it will still be well diversified. It also has a higher weighting to overseas shares compared to the standard options, and no Australian share manager. This higher weighting to overseas shares results in a higher foreign currency exposure, which may cause significant variances in performance compared to the other options over time.
The managers in this option were chosen because they are global leaders among their peers in terms of integrating sustainability into their decisions, or the underlying assets inherently generate environmental or social benefits.
How do we select our investments
For many years we have applied a comprehensive approach to Responsible Investment across our entire portfolio, and we’ll continue to do so because we think it will enhance long term results. As a natural outworking of our approach, we have a number of strategies or investments in our portfolio where there is a clear and tangible environmental or social impact. But we understand that some members wish to invest with a greater concentration on these strategies. The PositiveIMPACT option is designed for those members. We are able to offer it because of our long history of embracing sustainability and social issues within our mainstream options.
Fund managers in the PositiveIMPACT portfolio
Consistent with our overall approach to Responsible Investment within all of our Managed Choice options, we are naturally inclined towards considering investments which have a sustainability theme. To make it into the PositiveIMPACT portfolio, such investments must meet our standard risk/return criteria. By applying these criteria with an open mind, we have found a number of strategies that pass the test. Listed below are the Fund managers in the PositiveIMPACT portfolio:
Co-founded and chaired by Al Gore, Generation is a highly reputable and deeply experienced global share manager that fully integrates sustainability analysis into the decision making process.
Generation Investment Management is widely acknowledged as a global leader in the integration of sustainability thinking into its investment decisions. In broad terms, Generation seeks to invest in companies which are part of the solution to the world’s sustainability problems, not the cause of them. Consistent with our own thinking, Generation does not see their approach to portfolio management as entailing any requirement to sacrifice returns in pursuit of high standards of sustainability. Rather, they see their focus on the long term and a broad range of ESG issues as a competitive advantage which will enhance returns.
Stewart Investors are an autonomous investment team that manage approximately A$40 billion on behalf of their clients across Asia Pacific, Emerging Markets, Worldwide and Sustainable Development equity strategies. They have a distinct culture and investment philosophy that is unchanged in more than two decades, since the launch of their first fund in 1988. Their investment aim is to generate long-term, risk adjusted returns for their clients by investing in the shares of high quality companies that are particularly well positioned to benefit from, and contribute to, the sustainable development of the countries in which they operate.
In 2013, they decided to apply their approach to management of global equities. Catholic Super worked with them on this initiative and became a foundation investor in the new strategy.
GEEREF invests in renewable energy projects in developing countries around the world. Not only do these projects generate clean electricity, they also create jobs and efficiencies for local communities, providing enormous social, and development benefits.
This Fund was raised by an arm of the European Investment Bank and has a 50/50 mix of A shareholders (the German and Norwegian governments and the European Commission) and B shareholders (private investors). Catholic Super is the largest B shareholder, providing approximately 40% of the total B shares. Despite the “global” in the fund’s name, underlying investments are entirely in developing countries. GEEREF’s assets include windfarms, solar farms, geothermal project and hydro projects in developing countries across the globe.
Copenhagen Infrastructure Partners is a multinational team with extensive experience and knowledge within the fields of regulated infrastructure and renewable energy.
Founded in 2012, their investments include a wide range of energy infrastructure assets including offshore wind, onshore wind, offshore power transmission, biomass and waste to energy, and solar PV investments. Their projects are mainly in Europe, North America and East Asia (Taiwan).
Lighthouse Solar will own solar systems and earn revenue from parties who have contracted to buy electricity generated from these solar systems. This is achieved through entering long term electricity supply agreements such as power purchase agreements.
In 2016 this Fund began to invest in solar PV projects in Australia. The initial assets are utility scale solar farms in Queensland. Further utility scale projects are likely to follow although there may also be some smaller, behind the grid projects. Catholic Super is the largest investor in this Fund, providing almost 60% of the total capital. Solar PV is an area in which there has been relatively little institutional investment in Australia until recently. We believe, however, that solar has a bright future in this country and are happy to support Lighthouse at an early stage of their development.
Morrison & Co Australian Social Infrastructure Partners Fund is a social infrastructure fund that invests in a small portfolio of schools here in Australia as well as a hospital in South Australia, which is currently Australia’s most technologically advanced.