Industry Funds Management (IFM) has announced an environmental, social and governance (ESG) and low carbon strategy that draws on IFM’s indexed Australian equities process.
The new strategy is designed to help institutional investors reduce their exposure to companies that pose ESG and carbon risks, according to IFM listed equities executive director Aidan Puddy.
"A low carbon version of a portfolio can be engineered to deliver 50 per cent of the carbon emissions of an equivalently sized portfolio invested in the Standard & Poor’s/ASX 200 Index," said Puddy.
Industry super fund HESTA is one of the first institutions to take up the strategy, having already awarded IFM a $100 million mandate.
The strategy utilises MSCI ESC Research’s quantitative dataset and research to integrate ESG factors into the investment process, according to IFM.
"We chose MSCI following an in-depth analysis of a number of providers, based on data quality, coverage and methodology," said IFM listed equities director Laurence Irlicht.
"MSCI consistently rates highly on each of these measures," he added.
IFM director of sustainability and responsible investment, Azhar Abidi, noted the significant risks that ESG and carbon issues can create for investors.
"Listed companies face potential cost impositions from carbon pricing, as well as from poor governance, labour relations or environmental practices.
"In a rapidly changing regulatory environment, IFM is committed to giving investors the strategies they need to invest responsibly," said Abidi.
