ESG & Sustainability

Perennial believes that environmental, social and governance (ESG) issues can impact the performance of companies. Therefore, ESG & Sustainability performance can influence the returns generated by our investment portfolios. We are dedicated to integrating ESG & sustainability into our investment decisions and improving our own corporate ESG & Sustainability.

Our Approach

Our approach is guided by our four pillars of ESG integration:

1. ESG&E

The ESG&E Score is a proprietary scoring system established and run in-house by the Perennial sustainability team with input and insight from the sector analysts. Each company is given a score for Environment, Social and Governance performance as well as a score for company Engagement. Each portfolio must have an ESG&E score above the weighted average benchmark score.

2. Stewardship

Engagement with companies to discuss material ESG issues, risks and opportunities.

As responsible stewards of capital, we use our voting discretion in the best interests for our clients.

3. Exclusions / Negative Screens

Each portfolio has negative screens, excluding investment in certain industries.

4. Portfolio Management

The company’s ESG performance and characteristics are one of the considerations in portfolio construction. Stocks with ESG&E related concerns are either unlikely to be held or have a lower weight in the portfolio relative to other stocks with similar characteristics.

Striving For Market Leading ESG Integration

Perennial is dedicated to leading ESG integration across all investment products. Perennial Partners has been named as a RIAA Responsible Leader for four consecutive years from 2020-2023.

Perennial’s second annual ESG report for the 2021 financial year.

ESG Report

Engagement activities on Environmental, Social & Governance stewardship over 2021.

Engagement Report

Our fourth annual listed corporate Better Future Survey Report, which aims to take the ESG pulse of ASX listed companies.

Better Future Survey

Our contribution to the United Nations Sustainable Development Goals, our sustainable theme exposure, and our portfolio holdings that are contributing to a better future.

Better Future Impact Statement

Perennial’s fourth annual ESG report for the 2023 financial year has now been combined with our engagement report.

ESG & Engagement Report FY23

Our fifth annual listed corporate Better Future Survey Report, which aims to take the ESG pulse of ASX listed companies.

Better Future Survey

Our contribution to the United Nations Sustainable Development Goals, our sustainable theme exposure, and our portfolio holdings that are contributing to a better future.

Better Future Impact Statement

Our historical reports can be accessed here.

Our Commitment

Perennial has been a signatory to the United Nations backed Principles for Responsible Investment since 2009. We report our progress annually in the PRI signatory reporting tool. You can read our transparency report here. We received A’s across all areas in the 2020 assessment report.

Perennial is a supporter of the Task Force on Climate Related Financial Disclosures (TCFD) and encourage companies to report under the initiative.

Perennial is a signatory to the 30% Club, which campaigns for at least 30% of women on ASX300 boards. Where possible, we engage with companies to have equal gender representation on the board.

Perennial supports Climate Action 100+ which is an investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change.

Perennial is a founding signatory of Investors Against Slavery & Trafficking ASIA-Pacific (IAST APAC) and on a working group to assist companies to identify and take action on modern slavery and human rights issues in their supply chain.

Perennial is a member of Responsible Investment Association Australasia (RIAA) and is recognised as a Responsible Investment leader by RIAA in 2020, 2021, 2022 and 2023. Our Better Future Trust and the Perennial Better Future Fund (Managed Fund) (ASX: IMPQ) are certified Responsible Investment products.

Perennial Sustainability Working Group

We have a Sustainability Working Group which includes representatives across investment teams as well as from our operations and corporate functions. It is engaged in not only improving our approach to responsible investing but also developing our corporate strategy in relation to ESG, sustainability and responsibility.

We are constantly seeking to improve our performance in this area, and current initiatives include:

We source the electricity that we consume from 100% renewable energy.
We carbon offset staff flights.
We participate in building recycling programs and are engaging building management to improve sustainability outcomes.
We have mandatory ESG training for all staff members (including non-investment staff) each year.
Our primary cause that we support is the Humpty Dumpty Foundation which provides life-saving medical equipment for sick and injured children.
Tree planting initiative – find out more.

Perennial is operationally carbon neutral

Perennial Partners is proud to share that it has been certified as carbon neutral for its business operations for the FY22 period by Climate Active.

Climate Active certification is an Australian government-backed standard and is awarded to businesses and organisations that have reached carbon neutrality. Although this year is our first of being certified by Climate Active, Perennial Partners first achieved its carbon-neutral status for its FY21 operations in October 2021, through partnering with Path Zero.

Perennial Partners is committed to reducing its carbon footprint and believes that achieving operational carbon neutrality will help to facilitate a better future and the transition towards a low-carbon economy. We are pleased to provide transparency in our operational carbon footprint from a corporate perspective, and regularly encourage portfolio companies across all Perennial Partners funds to publish climate-related disclosures.

Since achieving operational carbon neutral status for Scope 1,2 and 3 greenhouse gas emissions in October 2021, Perennial Partners has achieved emissions reductions for FY22 through various measures, including increased teleconferencing and reduced business travel as a result of a hybrid work model, following the COVID-19 pandemic and reduced ICT spend.

Perennial Partners has purchased Australian Carbon Credit Units (ACCUs) to offset its emissions profile for the FY22 period. The ACCUs are associated with the Byzantium Induced Regeneration of Native Forest Human-Induced Regeneration Project. The Byzantium Induced Regeneration of Native Forest Project located in the Maranoa Region, Queensland, establishes permanent native forests through assisted regeneration from in-situ seed sources (including rootstock and lignotubers) on land that was cleared of vegetation and where regrowth was previously suppressed.

Emission Reduction Strategy

Based on current emissions calculation methodology and stable business outcomes, Perennial Partners will target a 40% reduction in total emissions across the value chain (scopes 1, 2 and 3) by 2030, from a 2021 base year.

Perennial Partner’s emissions reduction strategy seeks to minimise the firm’s operational carbon footprint, with a focus on our 6 largest emissions sources. Implementation of the emissions reduction strategy will be overseen by the Perennial Partners Sustainability Team, with members of the internal Sustainability Working Group across allocated specific deliverables.

Read further details about our emissions strategy can be located on the Perennial Partners Climate Active profile at https://www.climateactive.org.au/buy-climate-active/certified-members/perennial-partners.

Perennial is operationally carbon neutral

Perennial Partners is proud to share that it has been certified as carbon neutral for its business operations for the FY22 period by Climate Active.

Emission Reduction Strategy

Stewardship

In keeping with our philosophy of putting the long-term interests of investors first, our Responsible Investment Policy is designed to assist us to improve and uphold the governance of the entities in which we invest, as well as the competence and integrity of management.

Engagement & Proxy Voting

Perennial uses active stewardship to contribute to improving and upholding the environmental, social and governance (ESG) practices of entities we invest, so that they are managed with competence and integrity. We uphold the long-term interests of shareholders through discussions and engagement with companies and/or exercising our proxy voting responsibilities.

Perennial uses its proxy voting responsibilities for the best interests for our clients. Although we have the support of proxy voting research, we form our voting decisions independently based on our view of the management of, and corporate governance of the entity. On a semi-annual basis, we publish a summary of our proxy voting record. To see the record for 12 months to 31 December 2023, please click here.

Perennial’s Reconciliation Journey

In the spirit of reconciliation, Perennial acknowledges the Traditional Owners of the Country in which we work, the Gadigal people of the Eora nation, and recognise their continuing connection to land, waters and culture. We pay our respects to their Elders past, present and emerging.

We also accept the invitation in the Uluru Statement from the Heart to walk together in a movement of the Australian people for a better future.

At Perennial we believe that reconciliation is a crucial step for Australian businesses towards building strong and authentic connections with Aboriginal and Torres Strait Islander peoples. We are very proud to have released our first Reconciliation Action Plan in August 2022 – our Reflect RAP – the first stage of Reconciliation Australia’s RAP framework – and see this as a demonstration of our commitment and respect for the Traditional Owners of Australia.

We believe it our Reflect RAP will serve as a solid foundation to ensure our contributions to the reconciliation movement are meaningful and sustainable.