Social
BML Social Policy: Deeds not words
BML aims to be outcomes-led on social investing. Social responsibility can become confused by more policy than practice. We realise the difficulties in the field currently, and we’re taking a different approach, prioritising strong ratings from third party providers to cut through the noise. Our target is to be an industry leader in social ratings.
In practice, we measure our funds on social scores, compare the outcomes with benchmarks and peers, then report these levels. We make no guarantees about the future levels, in part because relative ratings depend on other parties' actions. Our preferred metric is the Bloomberg Social Score. This is an ESG measure calculated by Bloomberg for each listed company, based on social factors including Labour, Safety, Ethics, Corruption, Risk Management and industry-specific measures. We also use the MSCI ESG ratings as a secondary comparison.
BML Social Investment Policy explained
We believe that a company should have respectful relationships with their employees, shareholders, and the environment. We find that companies that break one of these bonds often are unreliable on the others.
BML Funds prioritises social factors in our investment strategies. We seek to be a leader in social ratings from third party ESG providers. We also work with expert third party consultants on identifying exclusion lists based on company social impact.
Labour relations are our primary social risk assessment. Companies that transgress labour regulations are subject to fines, government inquiries, and reputational damage. BML Funds looks to invest in responsible employers who provide a safe workplace and respect the rights of employees. Our target is top quartile among peers on social ESG ratings from Bloomberg, although we also consider other third-party data sources.
We also seek to invest in a pathway to minimised emissions. Again, we seek to be a leader in environmental ratings from third party ESG providers. We assess our environmental impact by broad ratings and specifically by emissions. We aim to be top quartile on the Bloomberg Environment Score.
Company management should respect that they are representatives of shareholders. Shareholders are entitled to open communication and protection of their capital rights. In practice, this is a low threshold that all companies should meet easily. We place much less weight on governance ratings, and instead assess a minimum acceptable level. We aim to be above the median ranking on the Bloomberg Governance Score.
On the next tier, we consider how a company treats their customers in terms of pricing and quality, how they adhere to tax and regulatory requirements, and the competitive structure of their industry.
After this assessment we have an exclusion list of stocks deemed incompatible with The BML Social Policy. This exclusion list is generally over 50% of the market. We also have stocks that are highly rated, which are given priority for portfolio consideration.
Disclaimer: The BML Global Fund is not marketed as an active ESG strategy. We make no claims about attaining future standards of ESG, for example certain carbon emissions targets. We view our social investment policy as a component of risk assessment which constitutes an ordinary investment process. The social scores, as sourced from Bloomberg LLP, do have an influence on our risk assessment process, and therefore investment decisions. In the absence of data availability we aim to source alternative third party data on social ratings, and we aim to report any material changes to investors. For more information see our PDS.
BML Funds Management Pty Ltd (ABN 48 664 470 991) is a Corporate Authorised Representative (No. 001230) of Havana Financial Services Pty Ltd (ABN 90 619 804 518, AFS Licence No. 500435) (Havana). Any advice contained in this communication is general advice only. None of the information provided is, or should be considered, personal financial advice. The content has been prepared without taking into account your personal objectives, financial situations or needs. If you consider it necessary you should seek your own advice before making any financial or investment decisions. The information provided in this communication is believed to be accurate at the time of writing. None of BML Funds Management, Havana or their related entities nor their respective officers and agents accept responsibility for any inaccuracy in, or any actions taken in reliance upon, that information.