Sydney-based ETF provider BetaShares has launched the BetaShares Australian Sustainability Leaders ETF (FAIR AU) on Australia Stock Exchange, providing exposure to locally listed companies whose business activities are grounded in sustainability.
BetaShares launches Australian Sustainability Leaders ETF.
Alex Vynokur, managing director of BetaShares, commented: “Demand for sustainable investing products is on the rise in Australia. More and more investors, especially younger Australians, are conscious about where their money goes and what kind of business activities they support.
“What started as a niche area for not-for-profit investors and religious groups has now evolved into a strong and positive trend of increased consciousness regarding financial investments. We believe responsible investing will only continue to gain relevance.”
The methodology of the underlying Nasdaq Future Australian Sustainability Leaders Index initially screens out companies involved in certain business activities including gambling, tobacco, armaments, uranium and nuclear energy, destruction of valuable environments, animal cruelty, chemicals of concern, mandatory detention of asylum seekers, alcohol, junk foods, pornography, human rights and supply chain concerns, and payday lending. It also conducts a fossil fuel screen to weed out the worst offenders in this regard.
The methodology also introduces a gender diversity screen, which requires a requisite level of gender diversity at the board level of the companies included in the portfolio.
Due to the impact of the broad-ranging methodology used by FAIR, its portfolio excludes the majority of mining stocks, including BHP and RIO, as well as the big four banks – all of which would likely be significant holdings in a traditional market cap-weighted portfolio of Australian equities.
Once past the anti-fossil fuel and ESG screens, the index assigns preference to companies classified as “sustainability leaders” due to their involvement in sustainable business activities such as renewable energy, water efficiency, recycling, waste remediation and re-use of materials, education, healthcare, animal health, healthy foods and nutrition products, and green star rated buildings, amongst others.
The fund costs 0.30% per annum in management fees.
The listing of FAIR complements BetaShares’ existing ethically minded ETF, the BetaShares Global Sustainability Leaders ETF (ETHI AU), which launched in January 2017 and provides access to a portfolio of global companies (ex-Australia) which are leaders in sustainability. Together, the funds provide a solution for local investors looking for global equities exposure with ESG-screening.
Since its launch in January, ETHI has gathered approximately $120m in assets making it the largest ethical ETF in Australia. The fund has a management fee of 0.59%.