“We hadn’t yet taken the product to market, so a specialist assessment by RIAA added significant rigour and value at the right time.”

 

 

 

 

About Maple-Brown Abbott

 

Maple-Brown Abbott is a domestic, privately-owned boutique fund manager with approximately A$9 billion in assets under management. With origins dating back almost 40 years, Maple-Brown Abbott focuses on active management of differentiated listed equity strategies. As one of the earliest Australian managers to sign up to the UN Principles for Responsible Investment, Maple-Brown Abbott has a long history of deep ESG integration which is core to each investment strategy.

 

 

RIAA certified fund

 

The Maple-Brown Abbott Australian Sustainable Future Fund was re-certified in March 2023 following a substantial product redesign. Maple-Brown Abbott’s Head of ESG and Portfolio Manager Emma Pringle says the core aim of the redesign was to employ a positive screening strategy in addition to the existing negative screen.

 

“We were very conscious about how we allocated capital to large capitalisation Australian listed equities, and particularly doing so in a way that would positively contribute toward one of the sustainability themes we identified for the Australian marketplace.”

 

These themes include health and wellbeing, innovation and technology, circular economy, low carbon future, better communities, sustainable infrastructure, inclusive finance and food production and distribution.

 

 

RIAA Certification a “valuable opportunity to test our thinking”

 

Emma says the process forced the team to take a step back and consider what they were aiming to do with the product, and the best ways to communicate this.

“The opportunity to test our thinking through an external lens was such a valuable exercise. It made us sit down and think, ‘How would somebody else think about this? What are the kinds of questions that others are asking us?’

 

“Getting assessed by the CAP (Certification Assessment Panel) was a really interesting and useful time for us to get external feedback. We hadn’t yet taken the product to market, so a specialist assessment by RIAA added significant rigour and value at the right time.”

 

Useful changes to product

 

Emma says most of the feedback received from RIAA was related to disclosures: ways to make the fund website clearer and ways to communicate the investment strategy and responsible investment aims more effectively.

 

Other practical changes stemming from the review included enhancing the rigor of some internal processes, such as better defining the treatment of ‘supply chain exposure’ for the negative screen and ‘future contribution’ to a sustainable theme for the positive screen in the Sustainable Investment Committee terms of reference.

 

“We found the level of detail and rigor in the questioning very useful because it gave us comfort that where we had tested ourselves was where others were going to test us. It also gave us a fresh perspective on the areas of our process that clients may be interested in.”

 

Extra comfort around regulatory scrutiny

 

Emma says the certification process was well-timed, as shortly after RIAA’s review, the Australian Securities and Investments Commission (ASIC) ramped up its policing of  ‘greenwashing’ marketing practices in the managed funds industry. To date ASIC has filed civil proceedings against three investment managers.

 

“As we had met RIAA’s Standard, we had added comfort that we were in a strong position to respond to any ASIC query about sustainability claims. We felt we could say ‘here’s something we prepared earlier’.”

 

 

 

A word of advice for those applying for certification: think about timing

 

Emma says there are practical considerations to keep in mind, like the roll-out of Product Disclosure Statements and other fund documentation.

 

“If you are designing a new sustainability-themed product, carefully consider the right stage of the product development process to commence the certification process. If you wait until your product has been designed and launched, you will have missed the opportunity to have that certification process inform the design process and fund documentation, which you want to get right.

 

“Build in enough time once you’ve designed and landed on your product internally, have all your draft disclosures in place, but allow enough time to do the certification and have flexibility. You absolutely want to be able to use the RIAA Certification Symbol on your product documentation.”

 

Emma also says getting organised early will prepare you for success.

 

“Get early access to and become familiar with the certification portal so you’ve got a clear idea of what’s expected. Do this in parallel to the product design process.”

 

Why would you not?

 

“When we are talking to prospective clients or consultants, we are regularly asked ‘is this product RIAA certified?’ To be able to say yes adds to our credibility and adds to clients’ comfort that we meets RIAA’s high standards.”

 

Emma says they are now considering certification for funds in other strategies after one of their clients had been through the process and encouraged them to apply.

 

“They said it adds so much value just through the act of methodically working through the construct of the fund. It provides a really clear indication of what the market expects from a responsible product. Plus, the brand and reputational benefits that flow from it, they told us ‘Why would you not? There’s no downside.’”