Industry Funds Management (IFM) has won a $100-million mandate from health and community services industry superannuation fund HESTA, which wants its Australian stock investments to produce as little carbon dioxide as possible.
Melbourne-based IFM, which manages about $33 billion, says it can measure carbon dioxide in its portfolio with the help of Morgan Stanley Capital International’s economic, social and governance analysis.
HESTA’s investments will be among S&P/ASX 200 Index stocks. IFM says its investments for HESTA will have a return that will at least mimic the index.
“We’ve done extensive testing and the portfolio will not perform any worse than the general market,” says IFM”s listed equities director Laurence Irlicht. “If the market prices in these factors (carbon dioxide emissions), then the portfolio will outperform the ASX 200.”
Aidan Puddy, IFM’s listed equities executive director, says another of its clients has explored investing along the same lines as HESTA.
“We are responding to client demand,” says Puddy. “We do see a market for this.”
Puddy and Irlicht worked closely with IFM’s director of sustainability and responsible investment, Azhar Abidi, to design the HESTA portfolio.
“It’s an easy way for investors to gain material enhancement to economic, social, governance and carbon dioxide factors without taking a large risk,” says Irlicht.
IFM has 10 people in its Australian stock investment team.