Environmental, Social and Governance (ESG)

VFMC believes organisations that perform better with regard to managing material ESG issues can improve risk adjusted returns. We consider ESG risks and opportunities alongside other investment factors to protect and manage investments for our clients.

ESG approach

VFMC has adopted the following approach for applying ESG in its investment process:

  • Stewardship – exercising votes at company meetings and engaging with investee companies, fund managers and policy makers on material ESG issues, including climate change
  • ESG integration – considering material ESG issues in the selection, management and monitoring of investments
  • ESG disclosure – encouraging the development of ESG-related standards for use by investee companies and other assets, and disclosure of VFMC’s ESG activities to clients and other stakeholders
  • Staying informed – expanding our understanding of material ESG issues affecting the portfolio, and staying informed on emerging trends

Although VFMC’s investment approach generally avoids exclusion, in certain circumstances after comprehensive assessment of the economic, reputation, legal and fiduciary requirements, client concerns, materiality, and risk and return issues associated with the investment, VFMC may decide to apply an investment exclusion. VFMC has exclusions in place for tobacco manufacturers and cluster munitions.

Our partnerships

VFMC is a signatory to the UN-supported Principles for Responsible Investment (PRI). These principles are broadly designed to encourage the integration and analysis of ESG characteristics in the context of risk for investee companies.

Find out more about VFMC’s approach to implementing PRI.

VFMC is a client of Regnan, a specialist corporate engagement firm. Regnan undertakes detailed research into the S&P/ASX 200 to identify sources of ESG risk. Regnan’s objective is to ensure that the factors necessary for businesses’ long-term performance are not overlooked in the pursuit of short-term financial returns. Where improvements are warranted, VFMC mandates Regnan to undertake constructive, collaborative engagement with these companies to ensure these risks are appropriately governed.

VFMC is a member of the Investor Group on Climate Change (IGCC). The IGCC represents institutional investors (with total funds under management of approximately $1 trillion). The IGCC aims to encourage government policies and investment practices that address the risks and opportunities of climate change.

VFMC is a member of the Global Real Estate Sustainability Benchmark (GRESB). GRESB conducts a benchmarking survey which assesses the sustainability performance of real estate portfolios (public, private and direct). VFMC uses the benchmark to engage and monitor the sustainability performance of our property fund managers. VFMC has extended its GRESB Investor membership to include Infrastructure in 2020.

Climate change

Climate change is one component of VFMC’s ESG considerations; however VFMC is committed to improving its understanding of material climate change risks.

VFMC acknowledges that climate change may affect the performance of investment portfolios to varying degrees across companies, sectors, regions and asset classes, and through time as a consequence of regulatory change and the physical and social impacts of climate change. Consequently, VFMC’s approach will evolve over time.

VFMC news

Vale Jack Diamond

VFMC is saddened by the recent passing of financial innovator and respected former VFMC...

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VFMC welcomes former CEO Lisa Gray to the Board

The Victorian Funds Management Corporation (VFMC) has announced the appointment of former Chief Executive Officer, Ms Lisa Gray to the Board of VFMC effective 1 January 2022.  In her...

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VFMC New Chief Executive Officer pending Lisa Gray’s Retirement

In April 2021, VFMC announced that Chief Executive Officer, Ms Lisa Gray, would be...

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Chief Executive Officer Lisa Gray’s Interview with CEO Magazine

“Anchored in Purpose” When Lisa Gray accepted the position of CEO at the Victorian...

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