Key takeaways

• Overview of how our Socially Responsible Growth option was developed.
• Insight into the risk levels associated with this investment option.
• How we select investments, including our approach to avoiding those associated with certain business activities.
• MLC’s Socially Responsible Growth option delivered a strong 14.3%¹ return for the 12 months to 30 June 2024, outperforming its competitors².

Socially responsible investment is an investment approach which prioritises various moral or ethical issues and values over other information that may be relevant to investment outcomes.

The MLC Socially Responsible Growth option is a diversified investment option managed by our investment experts at MLC Asset Management in a way that considers relevant environmental, social and governance (ESG) factors.

It aims to generate long-term returns above inflation for members who wish to be invested in a way that does not expose them to certain business activities which may conflict with their personal values.

Who may the MLC Socially Responsible Growth option be suitable for?

The MLC Socially Responsible Growth option is designed for members wanting a ready-made diversified portfolio which provides the opportunity to invest in a manner which prioritises various moral or ethical issues and values.

As this option is heavily focused at launch on growth assets (85%, although this will change over time due to market movements or active asset allocation decisions), such as shares, with only a small allocation to defensive assets (15%), like fixed income and cash, it is classed as a high risk option (estimate of 4 to 6 negative annual returns in any 20 year period).

Performance overview

In its first year, the MLC Socially Responsible Growth option delivered a strong 14.3%¹ return for the 12 months to 30 June 2024, notably outperforming its competitors in the high-growth socially responsible investment segment². This reflects the effectiveness of our strategy and commitment to generating long-term returns while adhering to socially responsible principles.

What is responsible investment?

Responsible investment is the practice of considering ESG (Environmental, Social, and Governance) factors in the research, analysis, selection and management of investments and the implementation of good stewardship practices.

Identification and consideration of relevant ESG factors in the investment decision making process allows our investment managers to recognise and act upon opportunities and risks related to ESG factors.

There are a number of ESG factors that may impact investments. They include:

Environmental (E)

• Climate change initiatives like reduction in greenhouse gas emissions
• Waste management
• Energy efficiency
• Water supply
• Pollution
• Biodiversity

Social (S)

• Human capital management
• Labour standards
• Modern slavery
• Diversity, Equity and Inclusion (DE&I)
• Workplace health and safety
• Integration with local community and earning a social licence to operate
• Indigenous rights
• Employee engagement

Governance (G)

• Rights, responsibilities and expectations across all stakeholders
• Board structure, diversity and independence
• Executive remuneration (short- and long-term incentives)
• Bribery and corruption
• Anti-competitive behaviour
• Political lobbying and donations
• Shareholder rights
• Tax strategy

Taking into account relevant ESG factors when making investment decisions supports the ability to maximise returns for our members.

Negative screening

In the Socially Responsible Growth option, we exclude certain sectors and companies using negative screening.

Negative screening is the process of excluding assets from an investment portfolio because they’re associated with particular business activities.

We’ve selected the most common controversial business activities to exclude.

The option has been designed for members specifically seeking to reduce - or where possible avoid - exposure to the following business activities subject to the revenue limits below which apply to the growth allocation (limits vary for the fixed income and cash allocation):

• Alcohol production – 0% revenue limit.
• Gambling, including the manufacture of specific equipment – 0% revenue limit.
• Tobacco manufacture – 0% revenue limit.
• Controversial weapons producers – 0% revenue limit. Examples of controversial weapons are (but not limited to): chemical weapons, biological weapons, and nuclear weapons.
• Thermal coal production – 10% revenue limit. Thermal coal production is defined as the mining of thermal coal (including lignite, bituminous, anthracite and steam coal) and its sale to external parties. Negative screening does not apply to revenue from metallurgical coal, coal mined for internal power generation (eg in the case of vertically integrated power producers), intra-company sales of mined thermal coal, and revenue from coal trading.

Want to know more?

Visit https://www.mlc.com.au/adviser/super/ready-made-portfolios/socially-responsible

More information on our responsible investment policy is available here.

¹ Past performance is not a reliable indicator of future performance. The value of an investment may rise or fall with the changes in the market. All returns are net of investment fees and tax considerations and do not include administration fees and costs. For details of relevant fees and costs, refer to the PDS and Investment Menu.

² Chant West Super Fund Performance Survey, June 2024: Socially Responsible High Growth net returns for 1 year ending 30 June 2024.