Djerriwarrh Investments, a listed investment company, has announced its approach to integrating environmental, social, and governance (ESG) factors into its investment philosophy to enhance income returns for its investors. The company aims to stay engaged with the companies in its portfolio to ensure ongoing alignment with its investment frameworks.
Material actions and disclosures
Djerriwarrh’s investment philosophy is built on taking a medium to long-term view on companies in a diversified portfolio with an emphasis on identifying and investing in quality companies that are likely to sustainably grow their earnings and dividends over time. The company considers matters including safety, diversity, social impacts, environmental impact, and modern slavery where material or appropriate in the context of the company.
Quality in this context is an outcome of the company’s assessment of the following factors: leadership position or development within the industry, a long-term sustainable business model with low risk of disruption, and outstanding management teams and boards with strong governance processes.
Alongside the assessment of quality, Djerriwarrh analyses the ability of companies to grow earnings over time, which ultimately should drive good dividend growth. The company also recognises value by assessing the opportunity a business has to prosper and thrive over the medium to long term.
Reporting of social and environmental issues is being influenced by the development of climate-related disclosures as required by Australian Corporate Legislation. Djerriwarrh’s portfolio showed that it has a lower relative carbon footprint, carbon intensity, and weighted average carbon intensity than the S&P/ASX 200 Index.
Forward commitments
Djerriwarrh has outlined its commitment to reach net zero by 2050, reflecting its broader contribution to social good in addressing the challenge of reducing global carbon emissions.
The company also prefers companies with more stable income flows and is wary of companies with large, inconsistent profit streams. It likes its companies to be financially strong, with a critical assessment of the balance sheet and the degree to which the company is self-funding.
Djerriwarrh actively engages with companies when it is concerned about resolutions that are not aligned with shareholders’ interests, seeking to stay engaged with the companies and satisfy itself that any issues are taken seriously and worked through constructively.
The company’s approach to investing is designed to offer investors a well-diversified portfolio of quality companies structured to deliver a higher level of fully franked dividend than is available from the market in general, providing an attractive total return including capital growth over the medium to long term.
Djerriwarrh’s approach to voting on resolutions is part of its regular engagement with companies in the portfolio, and its voting record is on the company’s website.
Djerriwarrh Investments’ approach to ESG integration is designed to enhance income returns for its investors while ensuring alignment with its investment frameworks and addressing the challenges of climate change and social good.