Alphinity manages $A42.6 billion in assets across five strategies, including two sustainable funds. The team comprises 21 employees supported by Fidante. In 2024, it offset 377 tCO₂e through Carbon Positive Australia, with travel accounting for 349 tCO₂e. Diversity initiatives continued, with 26% of the investment team identifying as female. Charitable support was provided to Women’s Community Shelters and Ardoch.

Pillars of responsible investing

The five pillars; ESG integration, stewardship and engagement, sustainable investing, thematics, and transparency, guide Alphinity’s ESG approach. In 2024, 199 ESG engagements were conducted across 124 companies. Key thematic focus areas were climate change, nature, workforce, human rights, First Nations, digital technology, social licence, and governance.

ESG integration

A refreshed ESG framework assessed over 40 ESG topics per company. A risk level (1–4) was assigned, with companies rated ‘4’ excluded. Materiality and management scores informed risk registers and engagement strategies. Tools like Bloomberg ESG and bespoke thematic frameworks (e.g. AI, net zero) were introduced. Notable integrations included reduced positions in Woolworths and South32 due to ESG events.

Stewardship and engagement

Alphinity held 199 ESG engagements and voted on over 2,200 resolutions, opposing management in 6% of cases. Key activities included responsible AI research with CSIRO, and collaborative efforts like Climate Action 100+ and PRI Advance. Examples of escalation included voting against remuneration at Rio Tinto and Telstra, and submitting feedback letters to boards.

Sustainable investing

Sustainable funds invest in companies aligned to the UN SDGs. A proprietary SDG Alignment Framework rated over 400 companies using revenue mapping. SDG alignment was strongest for SDG 3 (health), SDG 8 (decent work), SDG 9 (infrastructure), and SDG 11 (sustainable cities). All sustainable strategy holdings were reassessed, and 80% of 55 proposed companies were approved by the Sustainable Compliance Committee.

Thematics

• Climate change
  A Net Zero Alignment Framework was implemented. 45–55% of companies in Australian portfolios and ~40% globally are aligning to net zero. Transition risk remains high in mining and energy sectors. Engagements with Linde, Woodside, and Qube were prioritised.
• Nature: Alphinity joined the TNFD initiative and assessed risks across biodiversity, water, waste, and deforestation. Engagements included Rio Tinto (water risk), SK Hynix (semiconductor water use), and Zoetis (antimicrobial resistance).
• Workforce: Material issues included safety, psychosocial risk, and diversity. Alphinity expanded its Workplace Culture Framework to banks and retail. Engagements were conducted with JP Morgan, SK Hynix, Brambles, and Wesfarmers on workforce risks and remuneration.
• Human rights and modern slavery: A proprietary framework assessed 118 holdings. 20% showed medium-to-high supply chain risk. Industries flagged included apparel, agriculture, and mining. Engagements were held with Wesfarmers, Sherwin Williams, and Freeport McMoran via PRI Advance.
• First Nations: This new thematic focused on heritage and engagement. Alphinity conducted research trips to the Pilbara and Canada and prioritised engagement with Rio Tinto, Santos, and Transurban on co-management and cultural heritage.
• Digital technology: Responsible AI, data privacy, and cyber crime were key focus areas. Alphinity finalised a Responsible AI Framework with CSIRO and engaged with Microsoft, Thermo Fisher, and Wesfarmers on governance and ethical AI adoption.
• Transparency: Alphinity’s fourth annual ESG Report includes TCFD-aligned climate metrics and portfolio-level carbon reporting. No new policies were added, but existing responsible investment and stewardship policies were reviewed and updated.
• Reputation and social licence: Companies facing social licence risks (e.g. Woolworths, Santos, Rio Tinto) were monitored and engaged. Topics included controversies, regulatory scrutiny, and stakeholder impacts. Examples included feedback to Woolworths on salmon sourcing and social licence inclusion in Rio Tinto’s executive remuneration.
• Governance: Governance risks were assessed through board effectiveness, remuneration, and transparency. Alphinity voted against directors or policies at companies such as Alphabet and Telstra where governance concerns were present. Engagements addressed gaps in accountability, incentive design, and ESG oversight structures.