Responsible Investing 

Investors are becoming increasingly aware of the link between a company’s sustainability focus and its long-term success and profitability. There is increasing evidence that shows a strong link between good sustainability performance and corporate profitability. Also, in terms of environmental screening, a growing body of research suggests that superior environmental management usually correlates with high standards of corporate management which requires attention to more than just short term financials. As a result, responsible investing combines the best of both worlds – the potential to achieve strong performance over the long term while contributing to a sustainable environment. Pendal has been at the forefront of this movement.

Good corporate governance and sustainability is a central factor to a company’s long-term success. As an investor, we have made understanding these factors part of the fabric of our research and have developed a comprehensive Responsible Investment philosophy statement to provide guiding principles for our investment teams.

Responsible Investment philosophy statement

Our deep heritage in responsible investments

Pendal has been a long-standing supporter of sustainable investing with a heritage that dates back to 1984. Pendal has demonstrated its commitment to responsible investing through active participation in a range of industry initiatives:-

• Founder and joint owner of Regnan – Governance Research & Engagement Pty Limited. In 2001 we created the BT Governance Advisory Service to investigate and address environmental, social, and corporate governance-related sources of risk and value for long-term shareholders in Australian companies.  In 2007 BT Governance Advisory Service became known as Regnan – Governance Research & Engagement, jointly owned by Pendal and another institutional investor

• Signatory to the United Nations supported Principles for Responsible Investment.

• Member of the Investor Group on Climate Change (IGCC) and a member of the IGCC’s management committee.

• Investor Signatory to CDP

• Member and proud supporter of the Responsible Investment Association Australasia.

Today, Pendal offers a range of sustainable and ethical investment solutions across asset classes and manages over A$2 billion in assets through a suite of funds and tailored investment mandates. Our internal Responsible Investing team works in conjunction with Regnan’s research to seek opportunities to invest in companies that implement and display sustainable principles into their business strategies. The Responsible Investing team manages or contributes to the management of the:

Pendal’s Share Funds adopt a ‘Best of Sector’ investment approach, evaluating Australian companies based on environmental and social criteria as well as financial performance.  They use the same investment process as Pendal’s flagship Australian equities products with the addition of sustainability screens. The negative screen effectively determines the investment universe.  The positive screen identifies companies for active consideration, given their focus on the production of sustainable goods and services. Examples of positively screened companies include those that derive greater than 20% of their revenue from sustainable technologies, products and services. Pendal offers two investment strategies in socially responsible investing: Sustainability and Ethical. The table below summarises the key aspects of these different approaches:  

  Sustainability Ethical
Stock selection Bottom-up, all major industry sectors represented Bottom-up, some industry sectors not represented
Portfolio construction Disciplined process including social, environmental and financial criteria Core Pendal Australian Equities portfolio construction process with ethical overlay
Ethical preferences Generally no specified exclusions – not setting personal ethical preferences Avoid or promote certain areas – aligning personal or institutional values with investments
Rewarding companies Rewards ‘best’ companies across all sectors – encourages all sectors to improve Positive screens promote certain areas of investment

Several Pendal Group products have been certified by RIAA according to the strict disclosure practices required under the Responsible Investment Certification Program. See for details and visit for a more information about our certified products.

For our Diversified funds we provide a multi-asset solution with a strong focus on sustainable investments, within portfolios built to maximise risk-adjusted returns. Through our affiliate BT Financial Group (BTFG), we have been a signatory to the Principles for Responsible Investment (PRI) since January 2007. Through this initiative, signatories commit to incorporating ESG principles into investment analysis and decision making processes across the entire range of investments, as well as taking an active approach to their investments and working with other investors to improve ESG performance and practices. Importantly, as ESG issues are being incorporated into our mainstream investment processes, we report on progress via the PRI Reporting and Assessment Survey. This allows us to benchmark ourselves against our peers and identify strengths and weaknesses. Our subsidiary J O Hambro Capital Management is also a signatory to the UNPRI.