responsible investment certification program · certification products of and services against...
TRANSCRIPT
Version: July 2017
RESPONSIBLE INVESTMENT CERTIFICATION PROGRAMHelping consumers find a better investment option.
FINANCIAL ADVISER NEW APPLICATION GUIDE
CONTENTS
PROGRAM OVERVIEW ............................................................................................................................................ 1
TERMINOLOGY ............................................................................................................................................................ 1
FREQUENTLY ASKED QUESTIONS .................................................................................................................... 1
CODE OF CONDUCT ................................................................................................................................................. 3
HOW TO USE THE APPLICATION FORM ......................................................................................................... 4
CRITERIA .......................................................................................................................................................................... 5
A GUIDE TO COMPLETING THE CRITERIA QUESTIONS ........................................................................... 6
Education,trainingandexperience......................................................................................................... 6 ClientRIAdviceProcess............................................................................................................................. 7 RIProducts........................................................................................................................................................ 9
APPENDIX 1 .................................................................................................................................................................... 11
APPENDIX 2 ..................................................................................................................................................................... 11
APPENDIX 3 ..................................................................................................................................................................... 13
PROGRAM OVERVIEW
WhytheResponsibleInvestmentCertificationProgram?
TheRICPisoneofcorepillarsforRIAA’soverallgoaltodrivemorecapitalintosustainableassetsandenterprises,inordertoshapemoreresponsiblefinancialmarkets,deliverstrongfinancialreturns,andthroughthatcontributetoastrongerandhealthiersocietyandenvironment.
ThegoaloftheRICPistoassistwiththetransformationtowardsmoreresponsiblefinancialmarketsinAustraliaandNewZealandintwokeyways:
Buildingthecapacityoftheindustrytoinvestmoreresponsibly:helpingtoensurethatESGand/orethicalfactorsarefullyintegratedintoinvestmentdecisionmakingbysettingstandardsandhighlightinggoodinvestmentpractice;and
Helpingconsumersnavigatetowardsmoreresponsibleandethicalinvestmentchoices:helpingresponsibleandethicalinvestmentproductstobemorewidelyinvestedinbecausetheyareeasiertofind,betterunderstoodandalignwiththegrowinginterestbymanyclassesofinvestor. Keytoreachingthisgoal,theRICPaimstoincreasetheuptakeanddeepentheimpactofRIby:
Helpinginvestorsfindandcompareresponsibleinvestmentproductsandservicesthroughthestandardizeddisclosureandtransparent,easilyaccessibleinformation;Enablingconsumerstodifferentiateresponsibleinvestmentproductsandservicesfromothermoreconventionalinvestmentoptions,throughtheprovisionoftheCertificationSymbolforcertifiedresponsibleinvestmentproductsandservices.
TERMINOLOGYTheoverarchingtermRIAAusestodescribethe“family”ofproductsandserviceswhichtakeenvironmental,social,governanceand/orethicalissuesintoaccountwhenmakinginvestmentdecisionsisresponsibleinvestment.ToassistLicenseespromotetheirproductorserviceinawaythatismostmeaningfultotheirtargetmarket,theCertificationSymbolisavailablefeaturingthreedifferentterminologies:
1. ResponsibleInvestment2. EthicalInvestment3. SRI(socially/sustainableresponsibleinvestment)
FREQUENTLY ASKED QUESTIONS
What is the Responsible Investment Certification Program?
KeypartsoftheRICPare:
1. Certificationofproductsandservicesagainstinclusionsthresholds,disclosurerequirementsandoperationalandqualityprocesses
2. ThelicensingofaCertificationSymboltoqualifyingproductsandservicesforuseincommunicationsincludingmarketing
3. EffectivecommunicationsandmarketingbyRIAAofthecertifiedproductsandservices TheRICPprovidesclearinformation,marketingsupport,disclosureandguidanceatallpointsintheinvestmentcycle–forindividualinvestors(includingretailandwholesale,acrossindividuals,families,charitiesandnotforprofits),financialadvisers,dealergroups,fundmanagersandsuperannuationfunds.
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What is the Certification Symbol?
TheCertificationSymbol(theSymbol)istheRegisteredTradeMark.AllRIproductsandserviceprovidersareeligibletoenterintoatwoyearlicence(theCertificationSymbolTradeMarkLicenseAgreement(theAgreement))tousetheSymbolafterreceivingcertificationintotheRICPfromtheResponsibleInvestmentAssociationAustralasia(RIAA).TheSymbolisownedandmanagedbyRIAA.
Bydefinition,theSymbolverifiesthataLicenseehasadoptedtheinformation,operationalanddisclosurepracticesrequiredfortherelevantcategory.Inturn,theSymbolindicatestoinvestorsthattheycanaccessinformationabouttheLicenseeandtheirservicesfromRIAA’swebsite.TheuseoftheCertificationSymboliscoveredbytheLicenseeMarketingKitandStyleGuide(theStyleGuide).AconditionofthelicenseistheuseoftheCertificationSymbolincompliancetothisGuide.
Who can apply to license the Certification Symbol?
AnymemberofRIAAcanapplytohaveonemoreoftheirproductsandservicescertifiedaspartoftheRICP.OncetheapplicationhassuccessfullyprogressedthroughtheRICPprocess,alicenseagreementmaybeenteredintoforaperiodofuptotwoyearsatatime.Solongasamember’sRIAAMembershipremainscurrent,asdoestheircertificationundertheRICP,thelicenseeiseligibletousetheSymbolinaccordancewiththeGuide.
How will my application be assessed?
Theinformationcontainedintheapplicationisstrictlyconfidential.YourcompletedapplicationformwillinitiallybereviewedbyRIAAstaffforcompleteness,accuracyandrelevance.Iftheapplicationismissinginformationorevidenceisrequiredtosubstantiatesomeclaims,aRIAAstaffmemberwillcontactyourequestingsubsequentdata.Oncesubsequentdatahasbeenreceivedandreviewed,RIAAstaffwillmakearecommendationtotheRIAA’sCertificationAssessmentPanel(CAP).TheCAPwillthenformallyreviewtheapplicationagainsttheprogramcertificationguidanceandthresholdstest.
AprocessisinplaceforthedisclosureofanyconflictsofinterestwhichmayarisebetweenamemberoftheCAPandLicenceapplicant,ensuretheinterests(andconfidentialinformationofthe)licenseeapplicantiskeptconfidentialandstrictlycommercialconfidence.
RIAAreservestherighttoseekfurtherinformationfromtheapplicantandreviewtheapplicantcriteriafromtimetotime.PleaserefertotheRICPOverviewandGuidelinesfordetailsontheapplicationprocessandtimelines.
How long does the licence last?
YourinauguralCertificationSymbolTradeMarkLicenceAgreementlastsfortwoyearsfromthedatethatyousignit.EverytwoyearsthereafteryouwillbeinvitedtorenewyourLicenceAgreement.
What are the costs involved in certification?
CertificationisonlyopentocurrentMembersofRIAAandmembershipfeesvaryaccordingtothecategoryofmembership.
SomeRICPapplicantcategories,suchasFundManagers,requireathirdpartyverificationoftheself-declareddata(applicationform).ApplicantswillbeappointedanauditorfromRIAA’sRICPThirdPartyVerificationPanelandshallbechargedanominalfeefortheservice.RICPThirdPartyVerificationPanellistmeetRIAA’srequirementsforprofessionalism,experience,skillsandapproachtoverification.
AdviserandDealerGroupapplicantsdonothaveafeetoaccesstotheprogram.
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What is the RI Certification Program Code of Conduct?
BeingcertifiedasanadviserorhavingaproductorfundcertifiedundertheRICP,demonstratesacommitmenttogrowinganddevelopingresponsibleinvestmentacrossourregionandstayinginstepwithdevelopmentsinandperformanceoftheresponsibleinvestmentsector.
ConsistentwithRIAA’spurposeandgoals,participantsintheprogramcommitto:
Doingresponsibleinvestmentwell–ademonstrablecommitmenttosuperiorESGandethicalinvestmentmanagementandadvice
Promotingsuccess–anaccessiblenarrativefortheperformanceandimpactofresponsibleinvesting
Clarityandtransparency-offeringclear,transparentandeasilyaccessibleinformationforconsumersandotherstounderstandandnavigatethebroadarrayofRIproductsandservices YouwillberequiredtoconfirmyourcommitmenttotheProgramCodeofConductaspartofyourapplicationprocessandrenewal.
CODE OF CONDUCTBeingcertifiedasanadviserorhavingaproductorfundcertifiedundertheRICP,demonstratesacommitmenttogrowinganddevelopingresponsibleinvestmentacrossourregionandstayinginstepwithdevelopmentsinperformanceoftheresponsible.
ConsistentwithRIAA’spurposeandgoals,participantsintheprogramcommitto:
1. Doingresponsibleinvestmentwell-demonstrablecommitmenttosuperiorESGandethicalinvestmentmanagementandadvice
2. Promotionsuccess-anaccessiblenarrativefortheperformanceandimpactofresponsibleinvesting3. Clarityandtransparency-offeringclear,transparentandeasilyaccessibleinformationforconsumersand
othertounderstandandnavigatethebroadarrayofproductsandservices.
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HOW TO USE THE APPLICATION FORMIntroduction
TheRICPaimstoincreasetheuptakeanddeepentheimpactofRIbyhelpinginvestorsfindandcompareresponsibleinvestmentproductsandservicesthroughthestandardizeddisclosureandtransparent,easilyaccessibleinformation;andenablingconsumerstodifferentiateresponsibleinvestmentproductsandservicesfromothermoreconventionalinvestmentoptions,throughtheprovisionoftheSymboltocertifiedresponsibleinvestmentproductsandservices.
Getting Started
Itisessentialyoureadtheentireapplicationformbeforeyoucommencecompletingyouranswers.Whereverpossible,pleaseinsertortypeyouranswerintothespaceprovidedforeachquestionratherthanattachingmultiplesupportingdocuments.ThisensuresthattheCertificationAssessmentPanelisabletoreviewyourapplicationwitheaseandclarity.RIAA'smainrequirementfromyouoryourorganisationsinthisprocessishonestyintheresponsesyouprovideintheapplicationform.Wearealsoseekingasmuchdetailaspossibleinyourresponses.Theresponsesyouprovidemayformthebasisofanonsiteverificationassignmentwhereyourresponseswillbetestedandvalidated.Itisrequiredthatapplicantscomplete,maintainandupdatethisinformationsothatitiscurrent,relevantandreliable.
Structure
Thereareeightmainpartstotheapplication.ThecontentoftheanswersyouprovideinthesesectionsdeterminesyoureligibilitytobeconsideredintotheProgram.
• Section1-ApplicantDetails:includesyourcontactinformation• Section2-ApplicantProfile:servicedetails,legalandgovernanceinformation• Section3-RIEducation:detailsofyourRIeducationandtraining• Section4-AFSLicenseedoumentationorprocessforconsideringRI• Section5-ClientAdvice:exampleofclientsandsolutionsprovidedincludingfactfind• Section6-ProductsandServices:ApprovedProductListanddirectshareinformation• Section7-Declaration:includesachecklistofitemsthatcompriseyourcommitmenttoentryand/oron-
goingmembershiptotheRICP• Section8-TheSymbol:selectingtheCertificationSymbolyouwishtouse
How to Complete the Application Form
Theapplicationformitselfisanexcelformandcontainsarangeofquestionsregardingyouand/oryourorganisationdetails,productqualitiesandsystemsandprocessesformanaginghowyouprovideadviceand/orRIproducts.
Theapplicationformwillconsistofvariousquestiontypes,fromyes/noresponses,throughtotextbasedresponseswereadescriptiveanswerisrequired.Pleaseprovideasmuchinformationaspossible,describingthepolicies,systemsandprocessesinplacewithintheorganisationtoaidusinassessingyourapplication.
PleasenotethatinrelationtosomequestionsspecificevidencehasbeenrequestedsuchasPDS,FactFindandClientCaseStudiesandthismustbeprovidedasapartofacompletequestionnairesubmission.
How your information will be used
TheApplicationFormresponsesandaccompanyingevidencewillbereviewedandassessedbyRIAAstaff.Ateleconferencetoclarifyyourresponsemayormaynotberequired.OnceassessedbyRIAAstaffarecommendationwillbemadeandyourapplicationinturnwillbeassessedbytheCertificationAssessmentPanel.RIAAundertakestonotifyyouwithinfiveworkingdaysofyoursuccessfulapplicationtotheRICP.InthecaseofsomeproductcategoriesseekingapplicationtotheRICP,athirdpartyverificationmayberequired.
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Oncealliscompleted,RIAAwillrequireyoutosignthelicencingagreement.
I’ve completed and submitted my application form, what happens now?
Theassessmentprocessisestimatedtotakeupto8weeksfornewapplicationsand4weeksforrenewals.OnceyourapplicationhasbeenreviewedandapprovedbytheCertificationAssessmentPanel,youwillbeissuedwithaLicenceAgreementwhichyouwillbeaskedtosignandreturntoRIAA.UponreceivingyoursignedLicenceAgreement,RIAAwillissueyouwithyourchosenCertificationSymbol.YouwillalsoreceivetheLicenseeMarketingKitandStyleGuidewhichwillhelpyoupromoteyourstatusasacertifiedprogramparticipant.
More information
Ifyouhaveanyquestionsaboutthisprocess,theapplicationformortheevidenceyouhavebeenaskedtoprovidepleasecontactRIAAandwewillbehappytoassistyou:
[email protected]+61282288100
CRITERIACertifiedResponsibleInvestmentFinancialAdvisersmeetstrictoperationalanddisclosurerequirementsandmakepubliclyavailablespecificdetailsoftheirservices.TheyinvitetheirclientsandpeerstoholdthemtoaccountfortheirbehavioursconsistentwiththeResponsibleInvestmentCertificationProgramCodeofConduct.
CertifiedRIFinancialAdvisers:
1. Licensed: HoldacurrentFinancialServicesLicenceNumber,FinancialAdvisorLicenceNumberorAuthorisedRepresentativeNumberandaremembersofaprofessionalbody,suchastheFPA,ACCA,CPAAustraliaorICAA;and
2. Trained and/or Experienced: havecompletedtheRIEssentialsonlinetrainingcourseofferedbythePRIAcademyORhaveatleasttwoyears’relevantexperienceprovidingresponsibleinvestmentadviceandcandemonstratehowtheystayuptodateondevelopmentsinRI;and
3. Provide RI Services: undertaketopromoteRIoptionstoalloftheirclientsby,asaminimum,includingappropriatequestionsonresponsibleinvestingintheirFactFind(orequivalent)andareabletoperformtheinterviewprocessshouldclientsexpressaninterestininvestingresponsibly;and
4. Promote RI Products: candemonstratethattheyablyresearchandofferresponsibleinvestmentproducts,havingRIproductsontheirApprovedProductList(orequivalent);and
5. Promote the RI Certification Program:incorporatetheCertificationSymbolintotheirmarketingandcommunicationsmaterialinaccordancewiththeCertificationSymbolTradeMarkLicenceAgreementandtheLicenseeMarketingKitandStyleGuide.
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A GUIDE TO COMPLETING THE CRITERIA QUESTIONS
ThefollowingwillaimtoprovideyouwithabetterunderstandingoftheinformationtheCertificationAssessmentPanelisseekinginanumberofkeyquestionsthroughtheapplication.
Thisguideisintendedtoprovideguidanceonquestionsthatrelatetopart2oftheapplicationwhichseeksinformationaboutyourRIexperience,productsandservices.
Education, training and experience
Which of the following professional bodies are you currently a member?
Asasmallnotforprofit,RIAArecommendsFinancialadvisersapplyingtolicencetheCertificationSymbolbelongtoarecognisedprofessionalbody,asdefinedbyProfessionsAustralia,withanenforceableCodeofProfessionalConduct.
Membershipofarecognisedprofessionalisrecommendedfortwomainreasons:
1. RIAAdoesnothavetheresourcestomanageacodeofprofessionalconduct;and2. ArecognisedprofessionalbodyoverseesCPDforeachAdviser.
Wedounderstand,however,thatsomeAdvisersmaynotbelongtosuchaprofessionalbody.Inthiscase,weaskthatyouprovidemoredetailinthefollowingquestionastohowyoumanageyourContinuingProfessionalDevelopment.
If you DO NOT belong to a recognised professional body, how do you manage your Continuing Professional Development?
Pleaseonlyanswerthisquestionifyouarenotamemberofarecognisedprofessionalbody:
(a)Pleaseincludedetailsofwhereyouundertookyourtertiaryeducation(includingnameoforganisation,coursestakenandyearcompleted).
(b)Weaskyoutoprovidesufficientdetail–includingtranscriptsorrecordsofattendance–ofhowyoumanageandmaintainyourCPD.
Have you successfully completed the ‘RI Essentials’ online training course offered through the PRI Academy?
RIAAsetsthecompletionofthe‘RIEssentials’trainingcourseofferedthroughthePRIAcademyasaminimumrequirementforfinancialadviserstocompletetheprogram.
Ifyouhavenotcompletedthiscourse,youmaystillapplyforalicenceundertheRIAACertificationProgram,ifyouhaveatleasttwoyear’srelevantRIadvisoryexperience.
However,theRIAACertificationAssessmentPanelreservestherighttodeferyourapplicationuntilsuccessfulcompletionofthecourse.
How have you managed, developed and increased your knowledge of responsible investment, RI products 6
and specific ESG and ethical issues over the past two years?
RIAAallocatesahighweightingtothisquestion.Throughthisquestion,theCertificationAssessmentPanelareseekingtolearnmoreabouthowyouhavedevelopedandenhancedyourknowledgewithintheresponsibleinvestmentindustryasawhole.
Whenpreparingyourresponsetothisquestion,thinkabouthowactiveyouareinthisspace.Inparticular,advisersmustdemonstratethattheyhaveundertakenatleast20continuingeducationcreditpointswithinthelasttwoyears.Thesepointsarecalculatedviathefollowing:
5 POINTSAttendingorparticipatinginanyorganisedeventthatprimarilyfocusesonanESG/RItopicincludingbutnotlimitedtoconferences,seminars,lectures,briefings,webinars,workinggroups,round-tablesandfundmanagerbriefings.
3 POINTSReadinganypublishedliteraturethatprimarilyfocusesonanESG/RItopicincludingbutnotlimitedtopublishedresearch,journalarticles,texts,reports,studiesorrelevantworks.
OtheractivitiesoreducationschemesoperatedbythedealergroupaimedatmaintainingESGspecificeducationwillalsobetakenintoconsideration.Pleaseprovidefurtherinformationaboutthisinthespaceprovidedbelow.activitiesthatdevelopedandenhancedyourknowledgeofcurrentESG,responsibleinvestmentorissues.
ItisrecommendedthatCertifiedapplicantsparticipateinRIAAeventsandtraininggoingforwardtoaiddemonstratingcontinuingeducationwithintheRIindustrywhenitcomestimetorenewyourlicense.
Client RI Advice Process
Do you have a policy statement from the AFS Licence Holder which outlines the processes by which clients are provided RI advice which takes into account environmental, social, governance and ethical factors?
TheCertificationAssessmentPanelisseekingtounderstandfurthertheprocessbywhichyouprovideRIadvicetoyourclients.
Providingapolicystatement,oradetailedoutlineofthisprocesshelpstheCertificationAssessmentPanelunderstandhowRIadviceisbeingdeliveredwithinyourorganisation.
Do you undertake to promote responsible investment to all of your clients?
Whileweunderstandthatnotallofyourclientswishtoinvestresponsiblyorethically,wewouldliketoseeallclientsofferedtheoptionofresponsibleinvestmentadviceasaminimum.
Please provide us with the Fact Find questions you use which relate to responsible investment
TheResponsibleInvestmentCertificationProgramrequiresthatadvisersincludepreliminaryquestionsintheirFactFind(orasanaddendumtotheirFactFind)whichspecificallyseektodiscoveriftheclientwouldliketoconsiderenvironmental,social,ethical,labourstandardorgovernanceissuesintheirinvestmentdecisions.Thesequestionsarenotthemaininterviewquestionsbutratherbrief“openingquestions”.
Ourresearchsuggeststhatasignificantbarriertoconsumersactivelyseekingresponsibleinvestment
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adviceistheirlackofawarenessregardingitsavailability.AspartofyourundertakingasaCertificationLicensee,youagreetoassistinbuildingawarenessofresponsibleinvestmentproductsandservicestoclientsbyproactivelyassessingifyourclientwouldliketoconsiderESGissuesthroughouttheportfolioconstructionprocess.
Please provide a detailed explanation of the interview process that you use to determine a client’s responsible investment profile that guides your financial recommendations.
InadditiontoyourFactFindquestions,theResponsibleInvestmentCertificationProgramrequiresthatadvisersuseaninterviewprocesstoestablishtheresponsibleinvestmentprofileoftheclientthatwillbeusedtoguideyourfinancialrecommendationsforthem.
AstheinterviewprocessisinadditiontoyourpreliminaryFactFindquestions,pleaseprovideasdetailedaninsightaspossibleintoyourinterviewprocess.Weaskthatyoufocusondrawingoutanyspecificconsiderationsidentifiedbytheclient,andidentifyyourapproachtothisoftdifficultprocess.
• TheCertificationAssessmentpanelisseekinga‘flyonthewall’insighttoyourapproachtoclientprofiling,research,methodologyandportfolioconstructionprocess
• TheReviewCommitteeisseekingtolearnmoreabouthowyoudoapplyyourknowledge(orwillapply)andinformationyouhavegainedthroughyourCPDandtheonlineRIAAFinancialAdviserscourse.
Pleaseconsiderthefollowinginyourresponse:
• WhatapproachtoyoutaketoensureyourclientiscomfortabletalkingaboutESGissues?Howdoyoumakeitrelevantandpersonaltothem?
• HowdoesyourapproachtoresponsibleinvestmentandESGresearchenhanceyourclientexperience?
• Howdoyouensurethatyourclienthasaclearunderstandingoftheoptionsavailabletothem?• WhatdistinguishesyouandyourresearchtoolsfromotherAdvisers?
Describe (anonymously) the responsible investment profile and the financial requirements of two clients to whom you have provided responsible investment advice in the last two years.
TheCertificationAssessmentPanelwouldlikeyoutomaketheseexamplesasdistinctfromeachotheraspossible.ItisimportantthatyoubeabletodemonstrateyoursuccessinaccuratelyprofilingarangeofpotentialresponsibleinvestmentclientswhichwillthenleadtotailoredRIsolutions.ThisinformationwillprovideamorethoroughunderstandingofyourpracticefortheAssessmentCommittee.
Note:IfyouhaverecentlybegunprovidingRIadviceandyoudonothavetwo‘actual’clientexamples,pleaseprovidetwo(2)unique,‘hypothetical’clientexamples.Insixmonthstime,youbeaskedtoprovideanaddendumtothisapplicationbyprovidingtworeallifeexamples.
Pleaseaddresseachpointbelowbydescribingindetailforeachclient:
• Whotheyare;wheretheywork;howoldtheyare;anydependants;theircurrentlifestyle;howmuchtheyhavetoinvestetc.
• Ifanyspecificstandardsorconsiderationsarerequiredbytheclientaspartoftheirfinalsolution(nouranium,gambling,alcoholORincludeclean-tech,renewableenergy,microfinance,carbonmanagement)?Pleaseavoidstatementslike“TheclienthasarangeofESGconcerns”;spelloutwhattheywantandwhy.
• Theriskprofileandfinancialrequirementsofeachclient(balanced,aggressive/growth,wealth-8
builder,needsincomestream+securityetc)?• Howyoudeterminedeachclients’overallRIprofile(light/mid/darkgreen).Thisprocesswould
includediscussionandclarificationofeachofthefollowingpoints:• Theprocessforcommunicatingthefourportfolioconstructionprocessestoyourclient(Negative
/Positive/BestofSector/CorporateEngagement),andyourassessmentoftheirinterestinanRIsolution.
• What%ofacompany’sactivitywouldyourclienttolerateiftheyhadnominateditasundesirable(tobacco/alcohol/uranium/gambling).
• WhatexposuretheyexpectacrossallmajorAssetClasses.• Aspecificclientrequesttoallocateasplit(%)betweenRIandnon-RIsolutions,andthereasonsfor
thisallocation?• Theclients’propensitytoaccepthigherMER’sforRIproducts.• Whethertheclienthasconsideredallocatingpartoftheirinvestmenttophilanthropicorcharitable
causes.• Whetheradarkgreeninvestoriswillingtoaccept(potentially)highervolatility,andwhat%oftheir
investmentstheywouldallocatetoRI.• Iftheclientwaspreparedtoforgoexposuretospecificsectorsiftheseinvestmentsconflictedwith
theirvaluesprofile?
Based on each client’s RI profile and financial requirements outlined above, provide details of the responsible investment solutions that you advised.
Onceyouhaveoutlinedyourclientsprofileandriskstrategy,pleaseprovideinformationaboutyourportfolioconstructionprocess,payingparticularattentiontothefollowingguidancepoints.Pleasedescribeindetail:
• TheRIsolutionprovidedtotheclient,includingthespecificmanagedfunds(productnamesand%allocation),directshares(namesand%allocation),superfundsorplatforms(namesand%),thatformyourfinalRIrecommendation
• Howcloselythesesolutionsmatchedeachclient’sRIprofile.Ifthesolutiondoesnotmatch100%,howwasthiscommunicated?Whatfutureactionwillbetakentomorecloselyalignyoursolutionwiththeirvaluesprofile?
• TheresearchtoolsyouusedtoselecttheRIsolutionforeachclient?Oftenthetoolsusedandyouroverallapproachwillbedifferentforlight/mid/darkgreeninvestors;pleasedescribeandjustifyyourresearchmethods.
• Theprocessyouusedtolinkyourresearchandtheresponsibleinvestmentprofileofyourclienttotherecommendationyouprovided.Itisimportantheretojustify,basedontheclients’valuesprofile,whyyouthechoseninvestmentvehiclemostcloselyalignswiththeirvalues.
• Theongoingresearchormonitoring(everysixmonths/annually?)willyoudotomanagethissolutionandtheresourcesyouwillemploytoachievethis?Directsharesmayrequireclosermonitoring.
RI Products
Please provide a list of the responsible investment products (not providers) that are available on your approved product list or equivalent.
RIAAwouldlikeyoutoprovidethenamesofthespecificManagedFunds/products(asopposedtoproductproviders)thatareavailabletoyourclientsviayourDealerGroup‘ApprovedProductList’.Pleasealsoindicatewhetherornottheadditionofnewproductsislikely,whattheyare,andwhenthismayoccur.
Note:ArequirementoftheRICertificationprogramisthatanAdvisermustofferproductsfromtwoormoreproductproviders.
If you intent to, or currently do provide responsible investment advice on direct shares, please identify how 9
you do or plan to access the appropriate ESG research (as distinct from conventional research)?
IfyouofferresponsibleinvestmentadviceonDirectShares,thentheCertificationAssessmentPanelwouldlikeyoutodescribeyouraccesstoESGresearch.
Therearetwooptions:• Inhouse:IfyouundertakeyourownESGresearch,pleasedescribeyourprocess• Boughtresearch:PleaseidentifyyourESGresearchprovidersanddiscusshowthisinformation
allowsforamoreinformeddecisionmakingprocess.
BasedonyourESGresearchtoolsandprocesses,pleaseprovideadetailedbutconciseoverviewofthemethodologyforscreeningandanalysingdirectsharesincludingallrelevantE,SandGissuesfortwostocks,anddescribehowthoseissuesaffectedyourpropensitytorecommendthatparticularstocktoyourclient.
TheCertificationAssessmentPanelwouldlikeyoutodescribeyourmethodologyforESGscreeningandanalysisofDirectShares.Anexampleofanappropriateanswerisprovidedbelow:
EXAMPLE: BP
ExtensiveresearchthroughESGresearchproviders(Bloomberg,CAERetc).Subscribetofinancialnewsletters(insertnames)andpublications(insertnames)
Eissues:lackoftimelyresponseafteroilspill;disregardforenvironmentaleffectsofwaterpollution.
Sissues:Lackofconcernforlocalfishermanandothersmallbusinesses;riskassociatedwithexecutionofhealthandsafetymanagementwasnotreflectedinthecompany’sstockprice.
Gissues:concernaboutpastfiveyearsofremunerationreports;concernoverinsidedirectorship;setupanenvironmentalexposureoversightcommittee.
Please provide either an approved list of stocks/model portfolio or a sample of stocks that compliments your ESG research.
Wherepossible,theCertificationAssessmentPanelwouldliketoseeexamplesofhowyourresearchtranslatesintoanApprovedStockList.Pleasenotethatthisisnotapre-requisiteforapprovalundertheCertification,butmerelyawayfortheAssessmentPaneltogainfurtherinsightsintoyouroverallportfolioconstructionapproach.
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APPENDIX 1RIAA recommended Fact Find Questions on Responsible Investment
1. Yourinvestmentswillbechosenusingresearchtoachievethebestfinancialoutcome.Doyoualsowantenvironmental,social,ethicalorgovernancefactorstakenintoaccount?
2. Doyouwanttoexcludesectorsoractivitieswhichhaveamajorimpactontheenvironmentandsocietysuchastobacco,armaments,harmfulanimaltestingorgambling?
3. Doyouwanttospecificallyseekoutopportunitiesthathavepositivesocialandenvironmentaloutcomesaswellasgoodfinancialreturnsforexamplerenewableenergy?
4. Doyouwanttoinvestinallsectorsacrosstheinvestmentuniverse,prioritisingthosecompaniesineachsectorwhichhavethebesttrackrecordonenvironmental,social,ethicalandgovernanceissues?Thisap-proachmayincludesectorssuchastobacco,armamentsandgambling.
APPENDIX 2RIAA supplementary Fact Find Questions
Note:AsaMemberofRIAA,youareabletocopyandusethesetables,withtherecommendationbeingthatitformspartofyourFactFindandInterviewProcess.
Response DefinitionSupport Indicatesthatyouwouldliketoactivelysupport
companieswhicharemakingapositivecontributioninthisarea.
Avoid Indicatesthatyouwouldliketoscreenoutcompanieswhichareinvolvedinthoseactivities.
Analyseforriskexposure Indicatesthatyoudonotexpectinclusionorex-clusionofcompaniesbasedentirelyonthisissue,butratheryouwouldexpectanalysisonthedegreetowhichthisactivityhasamaterialimpactontheinvestment’svalue.Thisinformationwouldthenbeincludedincompanyvaluations.
Neutral Meansthatyoudonotfeelstronglyeitherwayaboutthisissue.
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Area of Concern
Response
Support Avoid Analyseforriskexposure
Neutral
EnvironmentalIssues
Nativeandoldgrowthandnativeforestlogging
Managementofclimatechangerisks
Corporateactivitythatresultsinexcessivegreenhousegasemissionsandotherpollution
Managementofwaterandenergy
Strategiestomanagepeakoil
Uraniummining
Nuclearpower
Othermining
Recyclingandwastemanagement
Investmentinrenewableenergy
Sustainablebuildingsandurbanplanning
Preservationofheritageandwildernessareas
CorporateGovernanceIssues
Overrepresentationofpaidexecutivesoncompanyboards
Restraintandprudencearoundexecutiveremuneration
Managementofshareoptionschemes
Disclosureofvotingpolicies
Structurestosafeguardagainstbriberyandgratuitouspayments
Timelyandbalanceddisclosureofallmaterialmattersconcerningthecompany
Structuresinplacetosafeguardtheintegrityofthecompany’sfinancialreporting
Activepromotionofethicalandresponsibledecision-making
Soundsystemsofinternalcontrolforriskoversight
Systemstoidentifyconflictsofinterest
Recognitionofthelegitimateinterestsofstakeholders
Social Issues
Weaponsmanufactureandsupply
Gamingequipment–manufacture&supply
Multinationalcompaniesusingchildlabourorslavelabour
Otherhumanrightsabuses
Indigenouspeoples’landrights
Equalopportunities
Unionism
Minimumlabourstandards
Familyandfemale-friendlyworkpractices
Philanthropicgivingandcorporatevolunteerprograms
Humanstemcellresearch
Societalconsequencesofclimatechange
Communityrelations
Occupationalhealthandsafety
Tobacco–manufacture
Alcohol–manufacture
OtherIssues
GeneticallyModifiedFoods
Cruelandharmfulanimaltesting
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APPENDIX 3
Definition of a “Profession” from Professions Australia
“Aprofessionisadisciplinedgroupofindividualswhoadheretoethicalstandardsandwhoholdthemselvesoutas,andareacceptedbythepublicaspossessingspecialknowledgeandskillsinawidelyrecognisedbodyoflearningderivedfromresearch,educationandtrainingatahighlevel,andwhoarepreparedtoapplythisknowledgeandexercisetheseskillsintheinterestofothers”
Itisinherentinthedefinitionofprofessionthatacodeofethicscoverstheactivitiesofeachprofession.Suchcodesrequirebehaviourandpracticebeyondthepersonalmoralobligationsofanindividual.Theydefineanddemandhighstandardsofbehaviourinrespecttotheservicesprovidedtothepublicanddeal-ingwithprofessionalcolleagues.Further,thesecodesareenforcedbytheprofessionandareacknowledgedandacceptedbythecommunity.
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