The RIL charter of operation has been amended so that funds will not be allowed to invest in companies that have more than a 20 per cent exposure to: mining thermal coal; exploration and development of oil sands; brown-coal (or lignite) coal-fired power generation; transportation of oil from oil sands; and conversion of coal to liquid fuels/feedstock.
The affected funds are the RIL diversified funds, the RIL Australian Share Fund, the RIL Diversified Fixed Income Fund and the RIL International Share Fund.
But speaking to InvestorDaily, AMP Capital head of environmental, social and governance (ESG) research, Ian Woods, said only one Australian company will be excluded from the investible universe – which he declined to name.
He also confirmed the RIL funds will still be able to invest in the big miners like BHP and Rio Tinto.
“For BHP, the value of their thermal coal business to the total value of BHP is probably in the order of five per cent. So BHP wouldn’t be excluded as a result of this policy,” he said.
The new formal limit will exclude 55 other international companies from the RIL investible universe, however, including the coal-mining arm of Peabody Energy and Coal India, said Mr Woods.
“The charter that the funds operate under has a requirement for the underlying managers to look at ESG issues of all the stocks, and favour those that are better performers in the sectors,” he said.
“A lot of the companies that are formally excluded from the sector were already excluded. So this policy formalises that.”
The RIL funds also have a materiality limit of 10 per cent when it comes to the production and manufacture of tobacco, nuclear power (including uranium), armaments, alcohol, pornography and gambling, he said.
“We’ll exclude companies that derive meaningful value from these [industries],” said Mr Woods.
