Cracking the Responsible Investing Code

Rachel Tinkler, Head of Responsible Investment at Mint Asset Management talks us through the role and benefits of responsible investment in our business, and how it affects our investors and as an industry.

What is the role of Responsible Investment at Mint?

At Mint, we place a strong emphasis on risk management. Responsible Investment is a recognition that the risks facing companies are more than just financial. All companies are exposed to environmental, social and governance (ESG) risks to varying degrees. We expect the companies we invest in to be aware of and appropriately manage these risks – just like any other risk they face – to ensure sustainable, long-term growth and returns. Plus, it’s the right thing to do. There is a raft of systemic issues the world is facing that have deep ramifications for the global economy and our way of life. Financial players and listed companies have a responsibility to be part of the solutions that will drive equitable change.

How does Responsible Investment benefit investors?

Again, it comes back to risk management. We expect a company that has solid strategies in place to manage their exposure to risks – be it climate change risks or their social licence to operate – will provide sustainable income or growth over the long term. That should then translate to providing our clients with sustainable income and capital growth over the medium to long term.

How does Responsible Investment affect the way our funds are managed?

Mint’s Responsible Investment approach is fully entrenched across all our funds. Before investing in Australasian companies, we run the potential investment through a proprietary ESG questionnaire. Before investing in a global name, we analyse the ESG score for that company provided by an independent third-party provider. These scores are one factor that dictate the ultimate weighting of that stock in each fund – amongst other qualitative and quantitative factors.

We are also building an engagement program , to identify issues that we need to address with investee companies, potential investments and wider stakeholders such as policymakers. This increased focus on engagement gives us the opportunity to positively influence ESG factors as an active manager more so than if we were a passive manager.

How does Responsible Investment affect the way Mint communicates with investors?

Communicating our responsible investing approach is something we need to do better – and that is part of the reason my role has been created at Mint. You can expect to see more and more on this topic from us. We’re hoping the more we communicate to our clients, the more feedback we’ll get on our approach too – as that’s an important piece to help shape our journey.

The regulator is focusing on greenwashing, what are your thoughts on this topic?

It is so important that your fund manager – in fact any business – is “doing what it says on the tin”. Responsible Investing is a rapidly growing area so it can be a challenge to keep up with all the changes and make sure your systems and processes are solid around what you’re saying you’re doing. But if we’re going to achieve real change, we must hold each other to account. 

But it’s also important to recognize that it’s not just one approach that’s going to solve the climate crisis or the raft of other issues we are facing. Much like your mother tells you when you reach for another sweet treat – everything in moderation. If a company is going to be forced to make sustainable change, any type of pressure to do that is important. If one fund manager wants to exclude that company to starve them of capital they could otherwise access if they were willing to transition, that’s a good form of pressure. If another fund manager wants to remain invested so they can push for change from inside the company, by engaging with management and the Board, that’s a great form of pressure too. No singular method is going to work – we need to come at these issues with a range of approaches if we are truly going to instigate change.

An important aspect of my new role is to better report and explain to clients what Mint’s approach is, and it’s something a lot of fund managers and companies need to get better at doing. So the more focus there is on the regulator to ensure companies are “doing what it says on the tin”, the better.