“We specialise in index-tracking investment solutions across Exchange Traded Funds (ETFs), Unit Trusts and segregated mandates (for institutions).”

SELECT BCI ESG EQUITY FUND

managed by Fairtree Asset Management

One of Africa’s leading passive investment management businesses

Level 4 BEE contributor

Group Assets > R 7.9 billion

Background

The Select BCI ESG Equity Fund is an equity portfolio that seeks to sustain high long-term capital growth by investing in socially responsible securities. The portfolio’s equity exposure will always exceed 80% of the portfolio’s net asset value. This fund considers the three central pillars of socially responsible investing, being Environmental, Social and Corporate governance (ESG) criteria when making investment decisions. ESG is a set of standards for a company’s operations that socially conscious investors use to screen potential investments. Environmental criteria look at how a company performs as a steward of the natural environment. Social criteria examine how a company manages relationships with its employees, suppliers, customers and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls and shareholder rights.

Investment Philosophy and Process

The benchmark is the S&P South Africa Domestic Shareholder Weighted (DSW) Capped ESG Index. CoreShares, a passive specialist, implements this index provided by S&P.

Methodology of this index:

Exclude

  • Tobacco
  • Controversial weapons
  • Thermal coal
  • Low UNGC scores
  • Bottom 25% of ESG scoring companies in each sector

Sort & select

  • Sort eligible companies in each sector
  • Select top performing companies, targeting top 75%

Weight

  • Weight companies by float-adjusted market cap

In addition to the exclusions above, Sasol was also excluded due to their high greenhouse gas emissions. Climate Action 100+, the world’s largest investor engagement initiative on climate change, issues a “net zero company benchmark” of the world’s biggest corporate emitters. This benchmark finds that Sasol’s current greenhouse gas (GHG) emission reduction target is not aligned with the goals of the Paris Agreement. Sasol does not fully comply with a single one of the 9 benchmark indicators.

About S&P

S&P has more than 20 years’ of leadership on ESG. During 1999, they launched the first global sustainability benchmark. Since then, they launched various ESG thematic indices in various jurisdictions. S&P has an innovative and integrated ESG approach. They have an expansive and expert global toolkit on ESG. The S&P Global ESG Score methodology promotes visibility on the sustainability topics that drive business performance today and identifies upcoming, long term risks and opportunities.

About CoreShares

CoreShares is one of South Africa’s leading passive investment management businesses. They specialise in index-tracking investment solutions across Exchange Traded Funds (ETFs), Unit Trusts and segregated mandates (for institutions). CoreShares is a contemporary, independent investment manager. They focus on passive investment principles and processes – investment strategies wrapped up in an index or rules-based form.