As demand increases for ethical, or socially responsible, investing, Susan Bower reveals some of the Western Australian companies receiving support from Australia’s ethical managed funds.
AUSTRALIANS’ awareness of and interest in ethical, or socially responsible, investing lags behind that of Europeans and Americans.
A study undertaken by the Ethical Investment Association put the socially responsible investment (SRI) tally for Australia at $A13.9 billion.
Compared with a $US21.7 trillion of SRI assets under management in the US by the end of 2000, and $1.8 trillion outside the US, Australia’s SRI total is minimal.
Nonetheless, demand for such investment is growing, with Australian SRI investments growing by 32 per cent in 2001-02.
“Over the past two years there has been a steady demand from clients in knowing how to match their investments to their values,” Hartleys specialist SRI investment adviser Christian Marriott said.
Australian ethical managed funds are largely using negative screening approaches as a basis for determining their available pool of target investments, and these are a starting point for many investors wanting to merely avoid supporting companies in certain industries.
Several Western Australian companies are included in the portfolios of some of Australia’s largest SRI funds.
Internet services provider iiNet is one of these.
As at June 30, iiNet formed 5.09 per cent of Australian Ethical Investment Limited’s Australian Ethical Equities Trust.
With assets worth $84.2 million, this trust is Australia’s sixth-largest ethical managed fund.
Australian Ethical Investment first started buying iiNet shares two years ago, and now the Anglican Church-owned ethical investment group Glebe Asset Management is also investing in iiNet.
iiNet founding partner and managing director Michael Malone said Internet transactions were considered more friendly to the environment than other processes which could use more resources such as paper.
iiNet is not the only WA company in the Australian Ethical Equities Trust. Alinta Limited makes up 2.99 per cent of the trust, Environmental Solutions International 1.89 per cent, Orbital Engine Corporation 2.14 per cent and Solar Energy Systems 0.33 per cent.
Alinta also accounts for 2.14 per cent of the Australian Ethical Balanced Trust, which has assets worth $89.9 million.
Alinta and Orbital Engine form 3.04 per cent and 2.03 per cent respectively of the Australian Ethical Large Companies Share Trust, which has $36.3 million of assets.
BankWest accounts for 3.59 per cent of Australian Ethical Investment’s Australian Ethical Income Trust, as an unsecured debt instrument, and likewise, 1.11 per cent of the group’s Australian Ethical Balanced Trust.
Australia’s largest ethical managed fund, the Hunter Hall Value Growth Trust, invests in liver cancer treatment company Sirtex Medical, chaired by WA-based founder Bruce Gray.
Sirtex is also in the portfolios of the Hunter Hall Australian Value Trust and the Hunter Hall International Ethical Fund.
But Hunter Hall recently was a concerned Sirtex shareholder.
The group was unhappy with aspects of the Cephalon Australia bid for Sirtex, and applied to the Takeovers Panel for a declaration of unacceptable circumstances in Sirtex’s affairs.
Hunter Hall had concerns over a pre-bid agreement between Cephalon and Sirtex, and what it deemed insufficient disclosure to Sirtex shareholders on potential transactions between the two companies, depending on the level of offer acceptances.
Earlier this week the Takeovers Panel acknowledged some concerns, but did not make the requested declaration.
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