The Ethically Conscious Growth investment option provides access to a diversified portfolio of investments with a view to providing long-term capital growth while avoiding activities (as detailed below) that have been identified as contentious within mainstream ethical investing frameworks.It does this by investing in underlying investment products managed by Vanguard Investments Australia Ltd, which provide exposure to Australian and international shares (hedged and unhedged), Global Fixed Interest (Hedged) and Australian Government Bonds (there may also be an allocation to cash from time to time).

 

In relation to Australian shares and international shares (hedged and unhedged), this investment option seeks to exclude the securities of companies that:

• have a specified level of business involvement in fossil fuels, nuclear power, alcohol, tobacco, cannabis, gambling, adult entertainment or weapons, and
• the Index provider determines are involved in controversial conduct because they do not meet certain labour, human rights, environmental or anti-corruption standards as defined by the United Nations Global Compact Principles.

 

For further information about the Index provider (FTSE) and the Index, including details of the screens and applicable revenue and ownership thresholds for each business segment, please refer to: www.vanguard.com.au/FTSE_Global_Choice_Index_Series_Ground_Rules

 

In relation to global fixed interest assets (hedged), this investment option seeks to exclude:

• Corporate and government-related issuers that have a specified level of business involvement in fossil fuels, nuclear power, alcohol, tobacco, gambling, weapons or adult entertainment. The Index provider specifies the level or type of involvement in, or amount of revenue earned from, the activities or business segments that lead to exclusion and these can vary from one activity or business segment to another. For further information about the Index provider (Bloomberg) and the Index, including details of the business involvement screens and applicable revenue thresholds, please refer to: www.vanguard.com.au/Bloomberg_MSCI_Global_Aggregate_SRI_Exclusions_Float_Adjusted_Index
•  Corporate and government-related issuers that are identified – through the use of MSCI ESG Controversies research – as being directly involved in one or more very severe ongoing ESG controversies through its actions, products or operations. ESG controversies include alleged violations of laws or regulations or alleged actions or events that violate commonly accepted international norms, including but not limited to norms represented by global conventions such as the UN Global Compact. For further information about MSCI ESG Controversies, please refer to: www.vanguard.com.au/MSCI_ESG_Controversies
• Government and government-related issuers with a MSCI ESG rating below “BBB”. For information about MSCI ESG ratings, please refer to: www.vanguard.com.au/MSCI_ESG_Ratings

 

Please note, the index screening process does not review certain securitised assets and company structures. Accordingly, securities issued by non-screened entities may be invested in.

 

In order to gain exposure to Australian government bonds, this investment option invests in a Vanguard Investments Australia Ltd (VIA) product that seeks to track the return of the Bloomberg AusBond Government 0+ Yr Index (‘the Index’).

 

The Index is a market value weighted index of securities (‘bonds’) issued by the Commonwealth Government of Australia, and Australian State and Territory Government financing authorities and treasury corporations. The product aims to hold all of the securities in the Index, where practical, or otherwise a representative sample of the securities included in the Index. VIA selects the securities it holds based on liquidity, access to markets, portfolio cash-flow and minimum trade quantities with the aim of tracking the return of the Index.

 

The product’s underlying Index does not apply any exclusionary criteria. At the  time of writing, all issuers within the Index have MSCI ESG ratings above the minimum ESG Ratings threshold which is applied to the Bloomberg MSCI Global Aggregate SRI Exclusions Float Adjusted Index (outlined immediately above).

 

Accordingly, VIA considers that the product is an appropriate inclusion for the Ethically Conscious Growth investment option, as if applied, an ESG screening criteria would not materially impact the product’s underlying Index.