The information contained in this document is general information only and does not constitute personal
financial advice. It does not take into account any person’s financial objectives, situation or needs. It has
been prepared by BetaShares Capital Limited (ABN 78 139 566 868, Australian Financial Services Licence
No. 341181) (“BetaShares”). The information is provided for information purposes only and is not a
recommendation to make any investment or adopt any investment strategy. Past performance is not
indicative of future performance. Investments in BetaShares Funds are subject to investment risk and
investors may not get back the full amount originally invested. Any person wishing to invest in BetaShares
Funds should obtain a copy of the relevant PDS from www.betashares.com.au and obtain financial and tax
advice in light of their individual circumstances.
Future outcomes are inherently uncertain. Actual outcomes may differ materially from those contemplated
in any opinions, estimates or other forward-looking statements given in this presentation.
Confidential – may not be distributed without the consent of BetaShares capital
Chairman, Asset Owners Disclosure Project
Former Leader of the Liberal Party 1990 - 1994
Former Leader of the Opposition
Economist & company director
Honorary Professorial Fellow, ANU Crawford School of Public Policy
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Climate disclosure and financial risk – a new horizon
APRA’s increased focus on financial institutions’ approach to managing climate risk
The investment case for the BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
Confidential – may not be distributed without the consent of BetaShares capital
Confidential – may not be distributed without the consent of BetaShares capital
Asset Owners Disclosure Project
Source: http://aodproject.net/
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The carbon bubble
Source: http://carbontracker.org/wp-content/uploads/2014/08/Carbon-Tracker-Initiative-Unburnable-Carbon-Fig3-e1410364122638.jpg
“[Climate and carbon disclosure] must change if financial markets are going to do what they do best: allocate capital to manage risks and seize new opportunities. Without the necessary information, market adjustments to climate change will be incomplete, late and potentially destabilising.”
Mark Carney, Governor, Bank of England
G20 Financial Stability Board
• Chaired by Michael Bloomberg
• Representatives from the world’s biggest companies and investors
Possible costs
• A carbon price of $50 a tonne would put 9% of the ASX at risk
• If energy companies had to cut dividends by 5% per year from 2020 to zero in 2050, these shares would lose 40% of their value. This would equal an 11% fall in the world’s stock markets.
Confidential – may not be distributed without the consent of BetaShares capital
Avoiding a carbon bubble – the need for disclosure
Fossil fuel divestment is the removal of investment assets including stocks, bonds, and investment funds from companies involved in extracting fossil fuels.
Confidential – may not be distributed without the consent of BetaShares capital
Fossil fuel divestment
Source: https://gofossilfree.org/commitments/
The Paris Agreement’s central aim is to strengthen the global response to thethreat of climate change by keeping a global temperature rise this century wellbelow 2 degrees Celsius above pre-industrial levels and to pursue efforts to limitthe temperature increase even further to 1.5 degrees Celsius.
The Paris Agreement, United Nations Framework Convention on Climate Change
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Consequences of the Paris Climate Accord
Climate disclosure and financial risk – a new horizon
APRA’s increased focus on financial institutions’ approach to managing climate risk
The investment case for the BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
Confidential – may not be distributed without the consent of BetaShares capital
Confidential – may not be distributed without the consent of BetaShares capital
Bank of England Governor, Mark Carney, said last year that the entry into
force of the Paris Climate Agreement ‘brings the horizon forward’ for action
on climate change. It heightens transition risks and opportunities, makes
them more immediate, and ‘puts a premium on the ability of private markets
to adjust’. Australia’s ratification of the Paris Agreement last November
ensures we have a new horizon too.
The general point is that the transition now in train could potentially lead to
significant repricing of carbon-intensive resources and activities and
reallocation of capital.
Geoff Summerhayes, Executive Board Member
APRA, 17 February 2017
3 Key Developments:
Paris agreement
The agreement provides an unmistakable signal about the future direction of policy and the adjustments that companies, markets and economies will need to make.
FSB Taskforce on Climate-related Financial Disclosures
Several years ago, G20 Finance Ministers and Central Bank Governors perceived that a lack of company transparency on climate risks was impeding investment, credit and underwriting decisions and obscuring potentially systemic climate-related risks.
Legal opinion on directors' duties
The opinion found that company directors who fail to properly consider and disclose foreseeable climate-related risks to their business could be held personally liable for breaching their statutory duty of due care and diligence under the Corporations Act.
Confidential – may not be distributed without the consent of BetaShares capital
Confidential – may not be distributed without the consent of BetaShares capital
Two types of risks:
1. Physical risks stem from the direct impact of climate change on our physical environment – e.g.
resource availability, supply chain disruptions or damage to assets from severe weather
2. Transition risks stem from the much wider set of changes in policy, law, markets, technology
Climate disclosure and financial risk – a new horizon
APRA’s increased focus on financial institutions’ approach to managing climate risk
The investment case for the BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
Confidential – may not be distributed without the consent of BetaShares capital
Confidential – may not be distributed without the consent of BetaShares Capital
BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
Product Name: BetaShares Global Sustainability Leaders ETF
Investment Objective Provide exposure to 100 large global stocks (excluding Australia) which are climate change leaders and which are not
materially engaged in activities deemed inconsistent with responsible investment considerations.
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BetaShares Global Sustainability Leaders ETF
ASX: ETHI
Key Information
ASX Code ETHI
Bloomberg
CodeETHI AU
IRESS Code ETHI.AXW
Asset backing Equities
Management
Fee0.49% p.a.
Expense
recoveriesEstimated at 0.10% p.a.
Inception Date 5 January 2017
Sector Allocation (%) Country Allocation (%)
As at 31 January 2017 As at 31 January 2017
Country Allocation (%)
As at 31 January 2017Top 10 Underlying Exposures
As at 31 January 2017
Company Weighting
Facebook Inc 4.5%
Apple Inc 4.3%
Home Depot Inc/The 4.0%
Intel Corp 3.9%
Roche Holding AG 3.7%
Visa Inc 3.5%
Mastercard Inc 2.3%
3M Co 2.3%
Medtronic PLC 2.3%
CVS Health Corp 1.8%
United States 72.1 Japan 7.2
Switzerland 4.1 Ireland 2.8
Hong Kong 2.8 Sweden 2.2
Britain 1.8 Denmark 1.5
France 1.5 Other 4.2
Information Technology 33.1
Consumer Discretionary 20.3
Health Care 19.3
Financials 8.3
Industrials 7.1
Consumer Staples 4.5
Telecommunication Services 3.8
Real Estate 2.8
Materials 0.8
Confidential – may not be distributed without the consent of BetaShares Capital
Investment Methodology of ETHI’s Index
Climate Leaders
• >60% more carbon efficient than the
average for the company’s industry
• Superior performers on ‘Scope 4’ carbon
emissions
ESG Screens
• Fossil Fuels
• Gambling
• Tobacco
• Armaments
• Uranium/nuclear energy
• Destruction of valuable environments
• Animal cruelty
• Chemicals of concern
• Mandatory detention of asylum seekers
• Alcohol
• Junk foods
• Pornography
• Recent significant fines/convictions
• Human rights
• Supply chain concerns
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ETHI’s Index v MSCI World ex-Australia (in AUD): May 2011-December 2016
Source: Bloomberg. The Index which ETHI aims to track is the Nasdaq Global Future Sustainability Leaders Index. You cannot invest directly in an index. The
inception date of the index is 29 April 2011. Past performance is not an indication of future performance of the Index or the ETF.
0
50
100
150
200
250
300
Confidential – may not be distributed without the consent of BetaShares Capital
ETHI’s Index v MSCI World ex-Australia (in AUD) v S&P Global 100
Source: Bloomberg. The Index which ETHI aims to track is the Nasdaq Global Future Sustainability Leaders Index. You cannot invest directly in an index. The
inception date of the index is 29 April 2011. Past performance is not an indication of future performance of the Index or the ETF.
Confidential – may not be distributed without the consent of BetaShares Capital
Benefits of ETHI
• Diversification – with a single trade, investors can get exposure to a diversified
portfolio of sustainable, ethical companies from a broad range of global locations
• Cost effective – Fund tracks the performance of an index (no ‘active manager’ fees)
• Large company exposure – strategy invests only in large global companies
• Reduced administration – as an Australian domiciled fund, investors do not need to
fill out W-8 BEN forms, or risk any potential U.S. estate tax issues.
• Transparent – portfolio holdings, value of the Fund’s assets and net asset value per
unit available daily on our website
• Liquidity – available to trade on the ASX like any share
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Portfolio Examples
Things to keep in mind
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Investment risk: Investment returns are uncertain and will be influenced by the
fluctuations of the markets as a whole and other risks.
There is no assurance that an index that uses environmental, social and
ethical criteria to select securities will outperform any other methodology for
constructing an index.
Investors should seek professional financial advice before investing.
Past performance is not an indication of future performance.
See PDS for more information about risks.
Confidential – may not be distributed without the consent of BetaShares capital
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