Environmental, Social and Governance (ESG)

VFMC aims to improve risk-adjusted returns by managing environmental, social and governance (ESG) risks alongside other investment factors. We believe integrating ESG factors into our decision-making process is essential to our role as responsible stewards of capital, and critical for safeguarding clients’ long-term returns.

ESG approach

VFMC seeks to wholly integrate ESG into all facets of our investment activities and our approach to investment stewardship encompasses the following key areas of work:

  • Active ownership – proactively engaging with investee companies and external fund managers and exercising votes at company meetings to drive tangible outcomes on a range of ESG related matters.
  • ESG integration – systematically integrating ESG factors into VFMC’s ‘whole of portfolio’ approach to investing across and within all asset classes.
  • Major ESG projects – important ESG projects to support our investment stewardship activities, such as modern slavery and climate risk management.
  • Collaboration and information sharing –  collaborating with other investors to influence change across the market at a systemic level, and sharing information with our clients, peers, and key industry groups to strengthen the industry as a whole.

VFMC primarily seeks to manage ESG risks through its active ownership investment approach and generally avoids exclusion. However, in certain circumstances, after comprehensive assessment of the economic, legal and fiduciary requirements, 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, cluster munitions and thermal coal.

Our partnerships

To maintain our robust approach to ESG risk, VFMC regularly collaborates and shares knowledge with peer investors and other industry participants. We also work with investment managers, investee companies and other institutional investors through investor-led initiatives to integrate, capture and monitor the positive social, environmental and governance impacts of investments.

Industry collaborations include:

  • VFMC as a signatory to the UN-supported Principles for Responsible Investment since June 2007.
  • VFMC’s membership of the Investor Group on Climate Change (IGCC), a collaboration of Australian and New Zealand institutional investors focused on the impact of climate change on investments.
  • VFMC as a participant of ClimateAction 100+, an investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change.
  • VFMC’s membership 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.
  • VFMC as a supporting partner of Vision 40:40, which is an initiative to ensure diversity in executive leadership in ASX300 companies. As investors, we support 40:40 Vision in the quest “to achieve gender balance in executive leadership across ASX300 companies by 2030.”
  • VFMC’s role in the Investors Against Slavery and Trafficking Asia Pacific (IAST APAC) initiative. IAST was established in 2020 to engage with companies in the Asia-Pacific region to promote effective action in finding, fixing and preventing modern slavery in operations and supply chains.
Climate change

VFMC believes the impacts and effects of climate change are systemic in nature and pose widespread risks to human and societal wellbeing, ecological health and resilience, and to the wider economy.

VFMC supports the aim of both the COP26 and 2015 Paris Agreement to limit global warming to well below 2 degrees (moving toward 1.5 degrees) to minimise the worst impacts of climate change. In doing so, VFMC makes the following commitments:

  • Achieve net zero portfolio greenhouse gas emissions by 2050.
  • Undertake engagement with investee companies on their decarbonisation efforts and transition pathways.
  • Support climate positive investments that not only provide strong financial returns, but also help drive the economy’s transition towards net-zero emissions.

VFMC news

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