How Verve Money invests ethically
Updated: August 28, 2023
When you think about ethical investing, you may be inclined to think about the types of things you don’t want your money invested in, like tobacco, gambling, fossil fuels, etc.
That’s because many investment funds that call themselves ‘responsible, aware, or sustainable’, only focus on negative screens, which is when a decision is made not to invest in certain companies or industries that don’t fit within the fund’s ethical investment mandate.
However, at Verve, we go well beyond ‘do no harm’ to a philosophy of ‘do lots of good’ – and that’s the really exciting part about Verve Money!
Our investment objective
At Verve, we seek uncompromising returns.
Our investment objective is to strive for strong returns for our members by making investments that aim to contribute towards a future world that is sustainable and equitable, with thriving communities and a healthy planet.
In addition, where possible we look for investments that will contribute to a future world where women+ have an equal seat at the table and true economic, financial and social equality.
Our ethical investment methodology
The ethical investment methodology for the Verve Money Fund is built on four pillars:
- To screen out investments that we believe to be harmful or contrary to our investment objective;
- To seek out investment opportunities in values-aligned activities;
- To explore impact investment opportunities in climate solutions; and
- To create diversified portfolios that favour competitive performance whilst balancing risk.
Pillar 1 – Negative screens*
We apply investment screens to all our investments (other than cash holdings).
Our baseline negative screens rule out any direct investment in companies and assets that derive direct revenue from:
- Fossil fuels – Owning fossil fuel reserves, and the mining, extraction or burning of fossil fuels (fossil fuels are defined as all kinds of coal, oil and gas);
- Nuclear energy – the operation of nuclear energy plants;
- Gambling – the operation of casinos and gambling facilities and the production of gambling products, including pokies machines;
- Tobacco – the production and manufacturing of tobacco products; and
- Armaments – the manufacturing, production, engineering or sale of armaments and weaponry.
Pillar 2 – Positive exposures*
We seek out investments in companies and assets (other than cash holdings) with the following attributes:
- Carbon leaders – companies that have a carbon efficiency that places them in the top one-third of companies in their industry or are otherwise superior performers in relation to avoided carbon emissions.
- Sustainability leaders – significant business activities or attributes that support the company’s alignment with the UN SDGs through activities in one or more of the following:
- climate adaptation;
- agriculture and land use;
- improved industrial processes and materials;
- pollution reduction;
- healthcare; transportation solutions;
- water efficiency;
- renewable energy and energy efficiency;
- green buildings;
- sustainable tourism;
- sustainable and regional infrastructure;
- social and community housing;
- worker and consumer protection;
- regional and community banking; and
- possession of key certifications such as B Corporations, Supply Nation and RAP Elevates.
- Green bonds – bonds issued to fund projects that have positive environmental and/or climate benefits and are verified as meeting sector-specific environmental standards set by the Climate Bonds Initiative.
To the extent that the relevant information is publicly available, we also seek to ensure that our positive exposures are in companies identified as drivers of gender equity.
* The lists above are a summary of the positive and negative screens applied. The application of the ethical screening methodology varies depending on the asset class and the type of screened activity. Revenue thresholds may apply. The decision to invest in a company or asset is made based on information that is publicly available to us at the time that the ethical screening methodology is applied, and may be subject to change. For more information about the ethical screening methodology, please review the Verve Money Investment Guide.
Pillar 3 – Impact investments in climate solutions
We seek to invest 20% of each of our portfolios in climate solutions
We seek to invest at least 20% of each investment option in companies or assets that aim to reduce or avoid CO2 emissions, like renewable energy, green transportation and sustainable products.
A company or asset that derives, or is expected to derive, at least 50% of its revenue from activities that avoid or enable a reduction in CO2 emissions qualifies for inclusion in the list of investments that we’ve classified as contributing to climate solutions. For more information, see our blog Why we Invest in Climate Solutions.
Pillar 4 – Strive for returns while balancing risk
We seek strong-performing investments and to create diversified portfolios to balance risk across our three investment options.
Our investment team strongly believes (backed by independent research) that responsible investments can outperform the market. And by creating diversified portfolios, we believe that we can balance risk. For more information, see our blog How Verve Anticipates Market Volatility (so you don’t have to).
Our commitment to transparency
Our aim is to be transparent about our investments so that you can decide if we’re living up to your values or not.
The Verve Money Investment Universe is a list of companies, funds and assets that have passed our ethical screening methodology. This means that at any point in time, the Verve Money Fund may be holding some or all of these investments.
For additional information, also check out our other blogs Why we Invest in Climate Solutions and Verve Money’s Ethical Charter.
This article is published by Verve Money Pty Ltd (ABN 71 653 669 366, AFS Representative No. 001294184), a Corporate Authorised Representative of True Oak Investments Ltd (ABN 81 002 558 956; AFSL 238184), as the Manager of Verve Money. A friendly reminder that all the financial information contained in this article is general in nature and does not take into account your personal financial objectives, situation or needs. It’s important to do your own research and consider getting in touch with a professional adviser to access specific information tailored to your unique situation.
You should read the Product Disclosure Statement, Investment Guide, Target Market Determination and Financial Services Guide before making a decision to acquire, hold, or continue to hold, an interest in the Verve Money Fund. Visit www.vervemoney.com.au/documents to view these documents.
Interests in the Verve Money Fund (ARSN 662 622 899) are issued by Melbourne Securities Corporation Limited (ACN 160 326 545, AFSL 428289). When considering financial returns, return of capital is not guaranteed and past performance is not indicative of future performance.