Environment, Social and Governance

Our approach to ESG.

Our ESG policy underpins Arculus’ activities across all jurisdictions where we operate. It sets out our approach to sustainable purpose and forms the basis of our decisions by focusing on business ethics and compliance, people and culture.

Business ethics and compliance framework

At the core of this framework is strong governance and a robust risk and compliance framework.

This framework is supported by procedures and systems to ensure that we apply, at all times, high levels of personal and professional integrity. With the support of our risk and compliance functions we have put in place the necessary policies and procedures including a code of conduct and an initial assessment of the reputation of potential clients, identification and monitoring of our clients (through initial and ongoing screening of clients, ongoing reviews and transaction monitoring) as well as ongoing training of our employees, to ensure that the highest standards of compliance are embedded in the firm.

We will not enter into, or maintain, relationships with individuals or organisations engaged in, or suspected of having engaged in, illegal activities or activities that go against our code of ethics.  The following is a list of considerations that we consider:

  • Environmental: Population impact & Sustainability
  • Social Concerns: Diversity, Human Rights, Consumer Protection, Animal Welfare
  • Corporate Governance Concerns: Management Structure, Employee Relations, Executive Compensation, Employee Compensation
  • Business Continuity Concerns: Short-term Strategies, Unknown Uncertainties.
  • Socially Responsible Investing: Investment Strategies, Inward Investors, Principles for Responsible Investment.

People and culture

Fostering openness, sustainability, and respect are our key objectives. We value everyone and strive to work as one team. We invest significantly in our people and their working environment by creating and maintaining a safe and healthy working environment and ensuring their ongoing professional and personal development.

We strive to create workplaces in which there is mutual trust and respect and where every person feels responsible for the performance and reputation of our firm. We respect one another and each other’s individual rights and customs. We work towards achieving a diverse workforce, recruiting, employing and promoting people only on the basis of objective criteria and the qualifications and abilities needed for the job to be performed.

We promote integrity and professionalism throughout the firm and pride ourselves in leading by example which we do by setting the right tone right from the top of our organisation. We consider ourselves to be personable and approachable and hold these attributes up as being key when putting our core values into actions.

Our approach to identifying, managing, and rectifying ESG risks within our business and supply chain.

Arculus is an investment manager that strongly believes and complies with the compliance principal of 4 eyes on every transaction conducted under all our discretionary mandates. As such its operations do not extend beyond being appointed as an investment manager by an external Trustee/Responsible Entity, person or corporation. Every transaction conducted under a mandate is externally viewed by Arculus as the Investment Manager, the Trustee/RE, Fund Administration and the Custodian. Mark to market valuations are done and reported to investors external to Arculus by Fund Administration.

We continuously engage with our people to translate our core values into action. We do this through communications and engagement, information, and consultation to assist them in realising their full potential.

As part of our continuous disclosure requirements as an AFSL to ASIC we identify and rectify all potential and actual ESG risks swiftly.

The pandemic has changed the way we work as a team. We now actively encourage work from home to minimise environmental impact via travel, meetings are held through online platforms where possible and all marketing materials are distributed online, avoiding all printing where possible. We do not have a glossy brochure, nor do we print reams of paper and where possible, any materials; paper, ink, etc., are all sourced locally. We continue to push individual accountability to all our staff and associates.

We do not commit to any international standards, reporting frameworks, or initiatives that promote responsible investment/ESG practices.

Although we do not belong or pay for inclusion in an association that monitors ESG standards or frameworks we apply a framework that is consistent with many international bodies that monitor ESG standards. As we don’t invest in the following industries our focus is on adherence to international labour use standards and workers’ rights:

  • Gambling.
  • The Australian Power sector at both generation and distribution levels.
  • Fossil Fuel mining (Coal, Gas, Oil, Uranium).

Policy and resourcing

Firm-wide investment policy that incorporates responsible investment/ESG considerations.

As an Investment Manager we employ the same ESG policies across all our mandates. We recognize that certain industries represent increased risk from not meeting prescribed ESG principles. This risk can be at a few levels:

  • Government Regulatory changes.
  • Access to capital markets.
  • Market pricing reflecting community perceptions.

Our focus is primarily on investigating the governance structures of each issuer as this is central to understanding the underlying business risks. Attention is also given to the level of equality and diversity because we have found that in longer term businesses that employ the best people regardless of their gender, racial background or age tend to outperform. As part of this we would exclude any business that relies on a supply chain that utilises modern slavery.

Across all the discretionary mandates of Arculus there is no exposure to the following industries:

  • Gambling.
  • The Australian Power sector at both generation and distribution levels.
  • Fossil Fuel mining (Coal, Gas, Oil, Uranium).

We do not chase higher short term returns by investing in offshore  securities because of the increased risks that include currency but also regulatory differences   that protect the Australian Financial System. Identifying inadequate governance practices is more difficult offshore when we don’t fully understand the cultural practices. At an ESG level this means we don’t consider sectors like Weapons, Tobacco, or Drugs.

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