We believe that business is a pivotal stakeholder in society, and that the pursuit of profitable growth, a strong awareness of social and environmental issues, and best-practice governance standards are not mutually exclusive.
Daintree Capital’s first annual ESG & Sustainability Report for the 2022 financial year. This report aims to provide insight into the firm’s integration of ESG at both a corporate and investment level, in addition to our ESG engagement efforts with companies in our portfolios.
Integrating ESG principles supports portfolio outcomes
ESG integration will identify and manage key risks
Identify opportunities to positively impact the future
We are committed to be an active member of the UN PRI initiative, working toward the ideals embodied in the six principles at the core of the UN PRI. We have adopted the UN Global Compact as high-level guideposts for assessment, particularly regarding the environmental and social issues relevant to most businesses.
Human action is contributing to climate change, and therefore we have a collective responsibility to address the challenges it creates. Furthermore, we see climate change as a material investment risk. We believe that businesses should seek to understand, and be transparent, about how their activities may be contributing to climate change. Governments have a role to play by devising and implementing appropriate policy to incentivise action and provide certainty to all stakeholders. We are committed to engaging with companies to advocate for better reporting and practical action on this issue.
We acknowledge that fossil fuels, by their very nature, are highly carbon intensive. However, the International Renewable Energy Agency estimates that less than 40% of electricity will be created from renewable sources by 2050. We support a globally agreed and implemented transition toward a lower emissions future, which includes the reduction of fossil fuel use for electricity generation and transportation. We will exclude companies exploring for or extracting fossil fuels, or those that burn coal for power generation.
Water is arguably the most important resource on our planet. Water scarcity is a growing challenge globally, and therefore we recognise water management and security as a relevant issue for most companies. We highlight the pollution of water resources by mining companies and water stress in the agricultural supply chain as key thematic issues but note that all companies can take steps to contribute to the protection and preservation of this most vital resource.
While we acknowledge the potential of nuclear power generation to support a lower carbon future, and the medical applications of nuclear medicine, we also note the many safety concerns related to nuclear power, which include the specialised disposal and storage of spent fuel, and the environmental impacts that may arise from a damaged or failed reactor. For this reason, we will exclude companies that derive any any revenue from the extraction of uranium or nuclear power generation.
Consenting adults in most countries are freely entitled to participate in gambling activities. However, when consumed in an unhealthy manner, gambling can cause significant hardship to individuals, families and communities. We will exclude companies that derive any revenue from gambling.
The consumption of alcohol, while legal for adults in almost all countries, has been linked with significant health and social issues. We will exclude companies that derive any revenue from alcohol production.
While legal for consenting adults, production and distribution of this material has been linked with multiple health, safety and social issues. We will exclude companies that derive any revenue from the production of adult material.
We exclude any company involved in the production of tobacco products as we can find no rational reason to support this industry.
There are no clear-cut, industry-recognised standards to define inappropriate content. Regulators and shareholders are beginning to question what this might look like and the impacts it can have on communities. Given that billions of people are now engaged in the social media universe, and that several social media companies are publicly listed and/or issue bonds, we see a role for investors to help define the relevant issues and engage in the debate.
We support fair and safe working conditions throughout global supply chains. We will assess a company’s performance, policies and standards in relation to workplace safety, freedom of association, forced labour, child labour, discrimination, harassment and other similar practices – and engage where appropriate to advocate for reform.
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