AMP Capital Investors Limited ABN 59 001 777 591 AFSL 232497 > AMP Capital Sustainable Share Fund Stock holdings as at 30 June 2015 JULY 2015
AMP Limited AMP Limited (AMP) is a major Australasian wealth manager and life insurer. The group comprises AMP Financial Services, which owns Australia's largest financial planning network and has leading market shares in a range of products and platforms, and AMP Capital Investors, a fund manager. AMP Financial Services provides financial planning advice, retirement savings, income protection, disability, general and life insurance, and selected banking products like home loans and deposits. These products and services are primarily distributed through a network of self-employed planners. AMP Capital Investors is a specialist investment manager. AMP Capital offers investment solutions across major asset classes including local and international shares, local and international fixed interest, property, infrastructure, diversified funds, multi-manager funds, and alternative investments such as absolute return funds, structured products and private equity. AMP Capital has traditionally been a leader in managing environmental issues of properties and shopping centres and is a signatory/member of the UN Principles for Responsible Investment (UNPRI), CDP and IGCC. The company has a solid set of staff policies and a good framework to manage its workforce. APA Group APA Group (APA) owns and operates over 14,100 km of high pressure natural gas pipeline infrastructure throughout Australia with a significant presence in all mainland states and territories. APA transports over 50% of Australia's natural gas through a network of pipelines comprising a mixture of mature and established pipelines between Moomba and Sydney, and more recently constructed pipelines. APA also has ownership interests in, and operates, the GDI gas distribution network and whilst it recently sold its interest in Envestra it retains its operations and management agreement. APA also provides asset management and operational services to a number of other third parties including Ethane, SEA Gas Pipeline and EII2. APA has a presence in each mainland state and territory. With the need to move to lower carbon intensive fuels, APA, as a major provider of energy with an emphasis on natural gas, offers the potential to make a significant contribution to the transition to a more sustainable economy. However, in the transmission and distribution of natural gas, there are some significant environmental, safety and social issues to address. APA has in place a robust safety and environmental management system, and provides some support for community groups. Asciano Ltd Asciano is a rail and port operator providing logistics services within infrastructure-based supply chains. Asciano has four key businesses: Pacific National Coal, Pacific National Rail, Terminals & Logistics and Bulk & Automotive Port Services. Pacific National Coal operates rail haulage services for the export and domestic coal markets in NSW, QLD and SA. The majority of coal hauled from the Hunter Valley in NSW is thermal coal destined for Asia and primarily used in power generation. While in QLD, the majority of coal hauled is predominantly coking coal destined for export steel mills in Asia. Pacific National Rail, in turn, specialises in non-coal haulage in Australia: containerised and bulk interstate and regional freight services and a separate division specialising in intrastate services in the eastern states. Asciano also provides stevedoring services under the Patrick brand in Melbourne, Sydney, Brisbane and Fremantle, port management services under the Patrick Ports brand and a specialised automotive import service under the Patrick Autocare brand. Aurizon Holdings Ltd Aurizon (AZJ) owns and operates a 2,670 km rail network to haul freight. AZJ also provides a range of services in rail design, engineering, construction, management and maintenance, and offers supply chain solutions to a range of customers in Australia. AZJ is made up of four business segments: a coal rail haulage business which moves over half a megatonne of primarily coking coal per day; a freight rail haulage business specialising in mining inputs and commodities as well as general freight through QLD, NSW and WA; a rail network business which operates the Central Queensland Coal Network; and an iron ore rail haulage business connecting mines in the East Pilbara region to Port Hedland. // 1
Australia & New Zealand Banking Group Australia and New Zealand Banking Group (ANZ) is one of Australia s big four banks servicing all parts of the Australian economy. In Australia and New Zealand, ANZ provides a full range of banking services including residential and investment mortgage lending, deposit taking, credit cards, electronic banking including internet banking, overdrafts, term loans, trade finance, commercial bill acceptances and treasury services. It also provides a range of financial services in a number of Asian countries, the UK and the US. ANZ's prime focus is on banking and investment; therefore it has the potential to help the financial future of its customers. As a significant investor and lender, it plays a gatekeeper role in facilitating social responsibility through its corporate governance and investment decisions. ANZ has a number of charitable funds, providing funding for community health projects. The Fund sees some of the key challenges that ANZ faces (as with many banks in Australia), are the responsible management of its investments and lending practices to include environmental and social issues. ANZ needs to consider employee relations with the move towards individual work contracts, and it also faces the challenge of meeting the community s expectations of banking services to regional and rural Australia and less advantaged groups. BHP Billiton BHP Billiton Limited (BHP) is a diversified resources group with a global portfolio of assets. BHP Billiton is among the world s largest producers of commodities along with substantial interests in oil and gas. Activities involve mining, exploration, production and distribution of minerals and petroleum. Production and processing mainly relates to metallurgical coal, copper, iron ore, nickel and conventional and non-conventional petroleum exploration and production. The main geographic areas of focus are Australia, South and North America. As a major resource company, BHP Billiton has significant social and environmental issues to manage. BHP Billiton has developed a set of core health, safety, environment and community management standards. These standards are not prescriptive procedures but set out standards that are to be implemented by individual operations and/or groups. The level to which these standards have been implemented varies across the organisation, though the level of implementation has been increasing. In addition, the majority of BHP Billiton operations are ISO14001 certified. BHP Billiton has been at the forefront of public reporting through company reports and other international initiatives such as the Global Reporting Initiative, the Extractive Industries Transparency Initiative, product stewardship initiatives for lead and diamonds and other mining industry standards. With many operations in developing countries, all parts of the organisation have undertaken significant social and community initiatives. There are still some ongoing challenges and issues which are of concern. For instance, BHP Billiton is the world's largest exporter of coking coal in the world and has a significant exposure to the oil and gas sector and product stewardship issues associated with the use and disposal of uranium mined from Olympic Dam. Managing the environmental and social issues in developing countries will continue to provide challenges to the company, along with continuing to respect the culture and work with the communities in which it operates. A continual focus on improving occupational health and safety performance, issues with respect to freedom of association for employees and significant social issues need to be managed in the countries in which they operate. BHP Billiton remains below the Fund s uranium/nuclear power exclusion criteria of 10% of revenue or profit coming from uranium (uranium represents less than 1% of BHP Billiton s total revenue). BHP Billiton successfully completed the demerger of South32, which contains its previous aluminium, South African and Illawarra coal operations, manganese and silver, lead and zinc operations, in May 2015. // 2
Brambles Limited Brambles Limited (BXB) provides pallet and container pooling solutions through the CHEP and IFCO brands. CHEP is involved in pallet and container pooling services. CHEP issues, collects, repairs, washes and reissues pallets and plastic containers from a global network of service centres to assist manufacturers, distributors and retailers to transport their products. CHEP containers can be used to transport materials, such as paper and finished goods. It also offers containers for special purposes, such as the transportation and storage of bulk liquid items for chemical and pharmaceutical industries. IFCO operates a pool of reusable plastic containers worldwide which are primarily used to transport fresh produce from producers to grocery retailers. Brambles also provides information management, secure storage and destruction facilities under the Recall brand. AMP Capital s ESG Research Team believes the company is well positioned to facilitate or offer solutions to sustainability issues, e.g. container and packaging reuse, waste management and more. However, Brambles also has to manage some significant environmental, social and workplace risks. A number of the Brambles divisions have developed formalised and externally verified management systems for quality, environment and safety with improvements being seen over the last couple of years in the areas of corporate governance and transparency. There is detailed corporate social responsibility (CSR) reporting in Brambles annual report. Caltex Australia Limited Caltex Australia Limited (CTX) is a transport fuel supplier, convenience retailer and an integrated oil refining and marketing company. It operates a refinery at Lytton in Brisbane. The company also operates with many subsidiaries: Caltex Australia Custodians, Caltex Australia Petroleum, Caltex Fuel Services, Petroleum Services, Hunter Pipe Line Company, B&S Distributors and Jet Fuels Petroleum Distributors. CTX supplies over a third of wholesale transport fuels in Australia and in 2014 refined 10.2 billion litres of fuel. Caltex operates 650 fuel and convenience store sites in Australia including 132 sites co-branded with Woolworths. 85% of this network is operated by independent franchisees. Caltex supplies an additional 1,100 sites including 475 owned and operated by Woolworths under a co-branding agreement. Following the closure of the Kurnell Refinery in Sydney, Caltex has shifted its focus from an oil refiner and retailer to primarily convenience retailing. Cochlear Limited Cochlear is a manufacturer and distributor of cochlear implantable devices for the hearing impaired. It operates in over 20 countries, distributing products in the Americas, Asia Pacific and Europe, the Middle East and Africa. The company employs approximately 2,500 people. Cochlear is known for three main product streams: Nucleus: a cochlea implant which converts sound signals via a sound processor into electrical impulses to stimulate the cochlea s hearing nerve Baha: a titanium bone conduction implant which uses bone conduction to transfer sound to the inner ear Hybrid System: this combines a sound processor with a bone conduction implant AMP Capital s ESG Research Team believes there is a growing demand for treatment of hearing loss and Cochlear remains the market leader in the cochlear implant market. It has a good corporate governance structure, quality assurance systems, and a strong focus on innovation. Commonwealth Bank of Australia Commonwealth Bank of Australia (CBA) is Australia's largest retail bank and one of the 'Big Four'. Its core business is the provision of retail, business and institutional banking services. It also is a major participant in Australia's wealth management sector with products covering superannuation and life insurance as well as retail and wholesale fund management activities. Whilst CBA concentrates operations in Australia, New Zealand and Asia Pacific, it also operates in several countries outside the region including the UK and US. // 3
The bank provides a full range of retail banking services including home loans, credit cards, personal loans, transaction accounts and demand and term deposits. CBA also offers a full range of commercial products including business loans, equipment and trade finance, and rural and agribusiness products. The Institutional and Business Services division of the bank serves corporations, government entities and other major institutions operating in Australasia. Corporate customers have access to financial markets services, securities underwriting, trading and distribution, corporate finance, equities, payments and transaction services, investment management and custody services. The Funds Management division is the bank's provider of investment products and superannuation. Customers either directly invest in the bank's range of investment funds offered, or have access to a wider investment choice via CBA's master trust product, FirstChoice. The asset management business manages investment portfolios for a diverse range of retail and wholesale clients. It provides a large range of active and indexed investment options including active and indexed investment options on shares, listed property, credit, cash, fixed interest and others. CBA s prime focus is on banking and investment and therefore has the potential to play a positive role in assisting in the financial future of its customers. As a significant investor and lender it plays a gatekeeper role in facilitating social responsibility through its corporate governance and investment decisions. CBA has been a major contributor/sponsor of numerous community initiatives and more recently in making commitments to reduce greenhouse gas emissions as a member of the AGO's Greenhouse Challenge Program and SEDA's Energy Smart buildings. CBA s property group has been proactive in assessing and managing sustainability issues, in particularly energy. As with other major banks, CBA has improved overall customer satisfaction levels in its retail banking division but customer service still needs to be a focus in its wealth management and advice divisions. CSL Limited CSL Limited (CSL) is a biopharmaceutical company that researches, develops, manufactures and markets products to treat and prevent serious human medical conditions. The operational businesses include CSL Behring (incorporating CSL Plasma) and biocsl. The company has manufacturing operations in the US, Germany, Switzerland and Australia. As a developer and supplier of blood products and vaccines, CSL is operating in a field of essential medical services for saving lives and improving human health. Achievements at CSL include the HPV vaccine GARDASIL and the regular provision of flu vaccines. CSL recognises the importance of ensuring a standard of company ethics, with its own ethics code and abides by the various industry codes, such as the Code of Conduct of the Australian Pharmaceuticals Manufacturers Association, the Code of Good Manufacturing and Code of Good Laboratory. CSL invests in the development of protein-based medicines to treat human illnesses. Most of its licensed medicines are purified from human plasma. CSL is also building its capabilities required to develop products using recombinant DNA technology. Products in Commercial/ Phase IV include Hizentra and Berinert Self Admin. DUET Group Duet Group operates the Dampier Bunbury Natural Gas Pipeline (DBNP), which is WA s principal gas transmission pipeline and energy distribution operations in Victoria. The DBNP is the only pipeline connecting the natural gas reserves of the Carnarvon and Browse basins on WA s North West Shelf with industrial, commercial and residential customers in Perth and the surrounding regions. Natural gas supplies approximately 50% of total primary consumption in WA. In 2011, Duet created DBP Development Group (DDG) to leverage strong pipeline engineering and operating skills to provide opportunities to deploy capital in accretive opportunities that would see DDG build, own and operate new pipelines and laterals. In September 2013, DDG reached an agreement with Chevron Australia to operate the Wheatstone Ashburton West Pipeline. United Energy, of which Duet is a 66% majority holder, is another part of Duet s asset portfolio. Its electricity distribution network, through United Energy, covers 1472 km 2 of south-east Melbourne and the Mornington Peninsula. It covers about 1% of Victoria s land area which is home to around 25% of the state s population. Approximately 90% of United Energy s end customers are residential. Duet also owns Multinet Gas which is a Victorian gas distribution company with a network covering 1860 km 2 of the eastern and south-eastern suburbs of Melbourne, the Yarra Ranges and South Gippsland. With the need to move to lower carbon intensive fuels, DUET, as a major provider of energy with an emphasis on natural gas, offers the potential to make a significant contribution to the transition to a more sustainable economy. However, in // 4
the transmission and distribution of natural gas, there are some significant environmental, safety and social issues to address. Goodman Group The Goodman Group is one of Australia s largest real estate investment trusts. It has three inter-linked businesses, based on industrial, warehouse and business park property. Goodman Group owns, develops and manages assets in Australia, New Zealand, Europe and Asia. It is a stapled security comprising a unit in the trust and a share in the management company. The AMP Capital ESG Research Team believes Goodman Group is increasing its commitment to the sustainable property space, through dedicated resources, participation in the CDP and the development of the GreenStar Industrial tool. In addition, it has developed a sustainability policy, strategy and framework, and conducts employee engagement surveys annually. Henderson Group Plc Henderson Group is an international, UK based, fund manager. It provides access to a broad range of asset classes including equities, fixed income, property, hedge funds and private equity for its institutional, retail and high net worth clients. As an independent global asset management firm, the company provides its institutional, retail and high networth clients with access to equities, fixed income, property and private equity. In 2014, the group announced the purchase of Geneva Capital Management LLC, sold its North American property business and contributed its non-us property business to a joint venture with TIAA-CREF. As a significant investor, Henderson Group plays a gatekeeper role in terms of sustainability and plays a positive role in assisting in the financial future of its customers. The company has a good corporate governance structure and strong risk management system. The company is a signatory to the UNPRI. Insurance Australia Group Insurance Australia Group Ltd is the largest general insurer in Australia and New Zealand, providing personal and commercial insurance policies under brands including, NRMA Insurance, CGU, SGIO, SGIC and Swann Insurance. IAG also underwrites motor, home and some other lines of insurance for RACV in Victoria and has joint ventures in Thailand, Malaysia and China. In 2014 the group acquired the insurance underwriting arm of Wesfarmers in both Australia and New Zealand. The group's prime focus is on insurance and superannuation and therefore plays a positive role in assisting in the financial future of its customers. As a significant investor it plays a gatekeeper role in facilitating social and environmental responsibility through its corporate governance and investment decisions. The AMP Capital ESG Research Team believes it has strong governance and comprehensive sustainability reporting. Lend Lease Group Lend Lease Group (LLC) is an international real estate and infrastructure group with interests ranging from investment management through to commercial credit services, development, financing, construction and project management. Sustainability is a key area of the company s strategy. It is committed to reducing its environmental impact in each location of operation. The company has an integrated environmental, health and safety management system, with increased staff training focussed on sustainability. It has made improvements in its safety management approach and health and safety management system, resulting in better performance over recent years. The company is prepared to reject projects that do not meet its safety criteria. It also has a strong focus on staff engagement and retention. Macquarie Group Macquarie Group Limited is a global financial services provider of banking, financial, advisory, investment and funds management services. Macquarie s primary focus is on banking and investments and therefore has the potential to play a positive role in assisting in the financial future of its customers. As a significant investor and lender it plays a gatekeeper role in facilitating social responsibility through its corporate governance and investment decisions. // 5
Macquarie has been recognised as a good employer and has also formed the Macquarie Bank Foundation. Each year the foundation takes a portion of the group s annual profit and allocates it fund programmes benefiting the communities of which Macquarie is a part. These programmes are in the areas of education, the arts, health research and health care, welfare and the environment. Mirvac Group Mirvac Group is involved in real estate investment, development and investment management and owns a diversified property portfolio of retail, commercial, and residential properties across Australia. Mirvac has two core divisions: Investment (MPT) and Development (comprising residential and commercial development). The Development Division operates across Australia and activities include office, retail and industrial projects. The Investment Division held approximately $7.2 billion worth of assets at the end of 2014 including offices, car parks, a hotel, retail and industrial spaces. It is a sensitive/gatekeeper company in alignment with sustainability, with a majority of the business based in construction, and the remainder in property and investment management and hotel ownership. However, the AMP Capital ESG Research Team believes Mirvac is a sector leader in managing its ESG risks, including extensive environmental targets and measures, carbon monitoring, influence in its supply chain and good people management. MYOB MYOB is a provider of business management software in Australia and New Zealand best known for its accounting and payroll software. MYOB provides accounting, payroll, tax, client relationship management, website, job costing, practice management and inventory software products to 1.2 million businesses in Australia and New Zealand. MYOB was a private company owned by Bain Capital, who retained a majority shareholding for six years before the company was floated in May 2015. National Australia Bank National Australia Bank (NAB) is a large financial services group providing a comprehensive and integrated range of financial products and services throughout Australia, New Zealand, Asia, the US and the UK although it has announced plans to sell its banking arms (Clydesdale and Yorkshire banks) in the UK. NAB's prime focus is on banking and investment and therefore it can help the financial situation of its customers. As a significant investor and lender, it plays a gatekeeper role in facilitating social responsibility through its corporate governance and investment decisions. NAB has responded to the need for providing banking services to low income and older members of the community through the National Concession Card and NAB Retirement Accounts, effectively offering fee-free banking for NAB customers who are pensioners or healthcare cardholders. NAB is a significant corporate sponsor with sponsorship programs, community partnerships and staff community support programs, supporting community, health and volunteer groups. As with many banks in Australia, the Fund sees the key challenge that NAB faces as the responsible management of its investments and lending practices to include environmental and social issues. It also needs to meet the community s expectations of banking services to regional and rural Australia and less advantaged groups. Oil Search Oil Search is principally involved in oil and gas exploration, development and production in Papua New Guinea (PNG), although Oil Search also has interests in Australia, South East Asia and the Middle East. Oil Search's principal oil and gas production projects in PNG are at Kutubu, Hides, Gobe/SE Gobe and Moran. Much of the gas from these projects goes to an upstream LNG facility (PNG LNG), operated by ExxonMobil but partly owned by Oil Search, which produces 6.9 million tonne per annum (MTPA) of LNG and 200 million barrels of associated liquids over its 30 year planned life. Oil Search has operations with high environmental, social, and occupational health and safety risks as it operates in environmentally and culturally sensitive areas of PNG. However, Oil Search appears to have comprehensive environmental and occupational health and safety management systems in place, with particular emphasis on complex // 6
social and political issues in PNG. In 2010, the company issued its first sustainability report. One of the challenges for Oil Search is the management of ESG issues around the development and operation of the PNG LNG plant, which it does not operate. QBE Insurance Group Limited QBE Insurance Group is a global provider of general insurance and reinsurance services in Australia, Asia Pacific, the Americas and Europe. QBE is an Australian listed company with a Group Head office based in Sydney, conducting operations in 38 countries. QBE's prime focus is on insurance and therefore plays a positive role in assisting in the financial future of its customers. As a significant investor, it plays a gatekeeper role in facilitating social responsibility through its corporate governance and investment decisions. QBE Insurance was the first Australian Insurance company to be a signatory to the United Nations Environment Program Statement of Environmental Commitment by the insurance industry. As part of encouraging improved occupational health and safety performance of its customers, QBE has occupational health and safety staff that provide advice to clients in the development of occupational health and safety systems and injury management. It also provides regular newsletters on worker compensation issues to clients. Ramsay Health Care Limited Ramsay Health Care Limited (RHC) is a global hospital group operating 151 hospitals and day surgery facilities across Australia, UK, France, Indonesia and Malaysia. Ramsay Health Care facilities cater for a range of health care needs from day surgery procedures to complex surgery, as well as psychiatric care and rehabilitation. In Australia, the company is an operator of private hospitals in the country with 66 hospitals, approximately 7,500 licensed beds, and day surgery units. The hospitals provide medical, obstetric and surgical services for admitted patients. Services offered include intensive care, day surgery, maternity, cardiac surgery, neurosurgery, ophthalmology, orthopaedic surgery, general surgery, ear, nose & throat surgery, gynaecology, plastic surgery, dermatology and paediatric surgery. In the UK, the company has 38 acute hospitals and day procedure centres. In France, Ramsay Health Care owns 100% of Ramsay Sante, which operates private hospitals in the greater Paris region, and Medipsy, a leading operator of private psychiatric hospitals. In Asia, the company operates three hospitals in Jakarta, Tangerang and Surabaya. Regis Healthcare Ltd Regis Healthcare (REG) is an owner and operator of aged care facilities across Australia with 4,719 Operational Places across 45 facilities located in VIC, QLD, WA, NSW and SA. REG specialises in providing accommodation to people who can no longer live independently but do not require acute hospital care. It does, however, provide hotel-type services to those that want or need them. In January 2015, Regis announced the acquisition of the 194 place aged care facility in Cairns, Redlynch Glenmead Village. With an aging population, the ESG Research Team sees the provision of aged care services, such as those provided by Regis, is a key need in Australia. ResMed Inc ResMed Inc. is a developer, manufacturer and distributor of medical equipment for diagnosing and managing Sleep Disordered Breathing (SDB). ResMed operates in approximately 100 countries and has offices in Asia, Europe, North America, Australia and New Zealand. The company produces autoitratation flow generators (AutoSet Spirit), CPAP flow generators and bilevel flow generators (Comfort and VPAP series) for diagnosis and treatment of sleep disordered breathing. Continuous positive airway pressure (CPAP) is fixed throughout the night to prevent obstructive sleep apnoeas (OSAs) non-invasively. ResMed also supplies diagnostic products which record respiratory and sleep data which can be used to provide appropriate OSA treatments. // 7
Resmed is a company with a focus on improving sleeping patterns and potentially reducing the incidence of diabetes. The business has a quality and customer focus. It is committed to public and physician education of sleep medicine. The AMP Capital ESG Research Team believes Resmed has strong R&D and quality focus. Scentre Group Scentre Group is an owner and operator of Westfield branded shopping centres in Australia and New Zealand focusing on fashion, food, leisure and entertainment. It has 12,669 retail outlets and 47 centres located in prime trade areas. It develops its retail destinations by integrating food, fashion, leisure and entertainment and by using technology to better connect retailers with consumers. It aims to continually improve its portfolio by developing existing centres and acquiring new centres. Many shopping centres in the portfolio are owned in partnership with property investment institutions with others being run under contract from property investment firms. Scentre makes efforts to ensure access for all to its centres by providing special use facilities such as parents rooms, child and parent with pram toilets and car spaces, senior citizen car spaces, travelators and passenger lifts for people with disabilities, parents with prams and senior citizens. Scentre sets water and energy savings targets for all shopping centres and has achieved significant improvements year on year. South32 Ltd South32 Ltd (S32) is a portfolio of assets producing alumina, aluminium, coal, manganese, nickel, silver, lead and zinc which was spun out of BHP Billiton in 2015. S32 has assets spread across Australia, Colombia and Africa. In Australia, S32 produces silver in its Cannington mine, metallurgical coal near Wollongong and manganese from an open cut mine in the NT and refinery in Tasmania. It also mines, refines and exports alumina in WA. South32 s Colombian mine also operates as part of the company s Australian region and is a nickel mining and smelting operation in Cerro Matoso. In Africa, S32 has four assets: Aluminium South Africa in Kwa-Zulu Natal and Maputo which includes the largest aluminium smelter in the Southern Hemisphere; Energy Coal South Africa located in Malahleni and Middleburg; Manganese South Africa in Hotazel in the Northern Cape; and Mozal, an aluminium smelter, in Maputo, Mozambique. S32 has inherited many of the systems from BHP to manage key environmental and health and safety issues. Like BHP, there are still some ongoing challenges and issues which are of concern. For instance, South 32 has to manage the environmental and social issues in developing countries, South Africa and Columbia, along with continuing to respect the culture and work with the communities in which it operates. A continual focus on improving occupational health and safety performance, issues with respect to freedom of association for employees and significant social issues need to be managed in the countries in which they operate. Suncorp Group Suncorp Group Limited is a QLD-based financial services conglomerate offering retail and business banking, general insurance, life insurance, superannuation and investment products in Australia and New Zealand. Suncorp has five core businesses including Personal Insurance, Commercial Insurance, Vero New Zealand, Suncorp Bank, and Suncorp Life. Within Personal Insurance, the group provides home and contents insurance, motor insurance and travel insurance in Australia. Within Commercial Insurance, it provides commercial motor insurance, commercial property insurance, marine insurance, compulsory third party insurance alongside other products in Australia. General Insurance includes home and contents insurance, marine insurance, business insurance, professional indemnity insurance and more. The Banking division provides personal and commercial banking, agribusiness, property and equipment finance, home and small business loans, savings/transaction accounts, foreign exchange, treasury products and more in Australia. The Life business includes life insurance products, superannuation administration services, financial planning and funds administration services in Australia and New Zealand. The group sells products through Independent Financial Advisers and direct to customers through Suncorp Group brands (e.g. Suncorp, AAMI, Apia and GIO). Suncorp s prime focus is on banking, investment and insurance, having the potential to play a positive role in assisting in the financial future of its customers. As a significant investor and lender it plays a gatekeeper role in facilitating social responsibility through its corporate governance and investment decisions. Suncorp has a strong regional focus with the provision of financial services and community support, through sponsorship and charities, throughout Queensland. // 8
Telstra Corp Limited Telstra is Australia's largest telecommunications and information services company, providing products and services that cover all aspects of the telecommunications industry in Australia. Telstra is the national universal service provider, so it must ensure that telephone services are reasonably accessible to all people in Australia. It is Australia's largest provider of internet services with three million customers. With its primary business focus in telecommunications, Telstra provides an important avenue for the communication of information therefore it facilitates education, entertainment and improved business practices. As the largest provider of these services in Australia, there is a significant social/community obligation to provide affordable access to its services. This has been one of the key focuses of Telstra over the past couple of years with the development of a Customer Service Charter and Performance review report. In recent years, Telstra has succeeded in improving occupational health and safety and environmental performance. It has also been recognised with an industry human resource management award. It has produced six public environmental reports outlining both the development of its environmental-management systems and its environmental performance, and three corporate social responsibility reports. An example of its environmental initiatives is the industry initiative to recycle over 10 million disused mobile phones in Australia. In addition, Telstra is a major sponsor of community and cultural events and groups. The AMP Capital ESG Research Team s main areas of concern for Telstra is its ongoing commitment to provision of affordable services to the public and its fair competitive behaviour in terms of allowing other communication providers access to Telstra s physical infrastructure. Transurban Group Transurban Group (TCL) owns and operates toll roads in Australia and the US. Its asset portfolio includes TCL s 100% interest in CityLink which connects three major urban freeways (the West Gate, Tullamarine and Monash) and links Melbourne's manufacturing hubs and the city centre, port and airport. In Sydney, TCL has interests in Hills M2 (100%), Lane Cove Tunnel (100%), Eastern Distributor (75.1%), M5 South West (50%), and Westlink M7 (50%). In the US, TCL partners with governments to meet the long-term transportation infrastructure needs of communities. In Virginia, TCL has an interest in roads including 95 Express Lanes (67.5%), Pocahontas 895 (75%) and 495 Express Lanes (67.5%). As a transport infrastructure manager, Transurban manages safety through road quality, support of road safety stakeholders and road user education. The group has an internationally certified quality management system (ISO 9001). All majority-owned assets (apart from Eastern Distributor and Lane Cove Tunnel) have certified safety management systems (AS/NZS 4801). US operations are working towards certification against OHSAS 18001 (safety management). It has developed disaster recovery plans including consultation with emergency services and back-up systems. In recent years, ESG risk management has improved and there has been a decrease in road accidents. Virtus Health Ltd Virtus Health provides a variety of assisted reproductive services, specialised diagnostics, day hospitals and other related assisted reproductive services across the eastern states of Australia. Virtus provides these services to its patients through a network of fertility clinics, embryology laboratories, andrology laboratories, specialised diagnostic testing laboratories and day hospitals. Virtus operates under different brands in each state in which it operates and recently expanded its services with the acquisition of 80% of IVF Sunshine Coast in QLD. Its reproductive services include a range of treatments to assist patients to fall pregnant who have been or may be unable to do so without medical intervention; these services include storage of eggs, semen and embryos. The specialist diagnostics services include andrology, andocrinology and genetic testing. Day hospitals provide procedures for many unrelated specialties including dental and plastic surgery as well as services such gynaecology and urology. // 9
Wesfarmers Wesfarmers Limited is an owner of diversified businesses, covering supermarkets, department stores, home improvement & office supplies; coal mining; chemicals, energy and fertilisers; and industrial and safety products. Wesfarmers employs more than 200,000 people across Australia and New Zealand. Within supermarkets, its brands include Coles and BI-LO supermarkets, 1st Choice Liquor Superstores, Liquorland, Vintage Cellars and Coles Express. Within home improvement & offices supplies, Bunnings is its retailer of home improvement and outdoor living products in Australia and New Zealand and supplier of building materials to commercial tradespeople and the housing industry. Officeworks is a retailer and direct supplier of office and technology products. In the retail segment, Target (mid-market) and Kmart (discount retailer) are mainly involved in clothing and homewares retailing nationwide. In resources, Wesfarmers Resources operations comprise the Curragh metallurgical coal mine in QLD s Bowen Basin and a 40% interest in the Bengalla thermal mine in the Hunter Valley of NSW. In the insurance segment, Wesfarmers Insurance operates in the general insurance and financial services sector. The Wesfarmers Chemicals, Energy & Fertilisers division operates chemical, gas and fertiliser businesses that service a range of sectors in both domestic and international markets. Wesfarmers Industrial and Safety division is a supplier of industrial and safety products and services in Australia and New Zealand. Finally, Wesfarmers has a 50% stake in Gresham Partners, 50% in Wespine Industries and 23% in BWP Trust. Wesfarmers operate in a diverse range of industries, ranging from business divisions with high sustainability risk (e.g. thermal coal mining and chemicals) to divisions closely aligned with sustainability (e.g. the safety division). Overall, Wesfarmers is considered to be sensitive in terms of sustainability, with a number of divisions having significant environmental and occupational health and safety risks. The AMP Capital ESG Research Team is concerned about some of the supply chain risks for Wesfarmers although it has made significant efforts in trying to improve supply chain risk from Bangladesh in particular. The Fund notes that numerous Wesfarmers operations are certified to or developing ISO14001 environmental management systems and have been improving overall environmental performance. Similarly, most business divisions have detailed occupational health and safety management systems. The environmental and occupational health and safety performance of Wesfarmers is reported in public annual EH&S reports. In addition, many of the divisions are quality certified. Finally, Wesfarmers alcohol exposure is below that of the Fund s threshold for financial materiality. Westfield Corp Westfield Group (WDC) is an internally managed, vertically integrated, shopping centre group undertaking ownership, development, design, construction, funds/asset management, property management, leasing and marketing activities. WDC has interests in and operates shopping centre portfolios with investment interests in 40 shopping centres across the US, the UK, and Europe, encompassing around 7,409 retail outlets and total assets under management of A$27.7 billion as of June 2014. At that time, the company split its Australian and New Zealand assets into a new company, Scentre Group, which is also held by the Fund. Westfield Holdings is the group's management and funds management provider. It participates in development, design, construction, leasing, marketing and management services to the shopping centres and is the fund manager for the property trusts in the group. As a large retail property group, Westfield needs to manage the challenges of a vertically integrated shopping centre builder and owner/operator range from safety and ecological footprint issues in construction stages; to the social and community impacts of operating a large retail conglomeration, social issues in the value chain such as cleaner conditions, environmental impact of tenants, and customers travelling to the centre. The group has increased its sustainability focus and has started sustainability reporting, including targets and performance data on key metrics. It has a global safety compliance system online (GSR Global Safety Reporting) and non-compliance is reported to management through to the board risk management committee. The GSR system allows data from safety indicators to be automatically aggregated from underlying source data (including, for instance, records of audits, reviews, incidents and injuries). The AMP Capital ESG Research Team s main concerns relate to corporate governance. // 10
Westpac Banking Corporation Westpac Banking Corporation is Australia's oldest bank operating a significant banking and financial services franchise in Australia, New Zealand and the near Pacific as well has having offices in key banking centres including London, New York, Singapore and Hong Kong with balanced exposures to retail, corporate and institutional sectors. Consumer Financial Services is responsible for sales, services and product development for consumer customers across Australia and manages third party consumer product relationships and the retail branch operations in Hong Kong and Singapore. Business Financial Services is responsible for sales, service and product development for small and medium sized business customers in Australia. It also has responsibility for group-wide working capital and specialised trade solutions operations and the management of third party business product relationships. Westpac Institutional Banking provides financial services to the corporate and institutional customer base, assisting and advising in the management of cash, funding, capital and market risk for companies and institutions in Australia and New Zealand. New Zealand Retail provides a full range of retail and commercial services to customers throughout New Zealand. It is a leading provider of banking services to small to medium business and is the banker of the New Zealand government. Pacific Banking provides a full range of deposit, loan, transaction account and international trade facilities to personal and business customers. Westpac's prime focus is on banking and investment and therefore the bank can help the financial situation of its customers. As a significant investor and lender, it plays a gatekeeper role in facilitating social responsibility through its corporate governance and investment decisions. Westpac has been one of the first Australian financial institutions to commit to environmental and social initiatives including being a signatory to the UNEP financial initiative, the Australian government s Greenhouse Voluntary Reduction Scheme (Greenhouse Challenge Program), and development of a Social Accountability report. Westpac has charitable funds that fund community and healthcare projects. Westpac has developed good employee programs, covering areas such as business ethics and anti-discrimination, work safety and employee professional development. As with many banks in Australia, the Fund sees some of the key challenges Westpac faces include the responsible management of its investments and lending practices to include environmental and social issues. It must also meet the community s expectations of banking services to regional and rural Australia and disadvantaged groups. Woodside Petroleum Woodside Petroleum Limited is an oil and gas company with a portfolio of liquefied natural gas trains, offshore platforms, oil floating production storage and off-loading vessels. Woodside produces and sells LNG, pipeline gas, oil condensate and LPG, and operates major Australian LNG projects in North West WA. It also holds interests in operating assets located in Australia and internationally. Woodside's main business is the operation of the North West Shelf JV (16.7%), which is one of Australia's largest resource development projects, focusing on production of liquefied natural gas (LNG) for export, domestic gas, condensate and liquefied petroleum gas (LPG). With the need to move to lower carbon intensive fuels, Woodside, with its focus as a major natural gas provider to WA and the export market, offers the potential to make a significant contribution to the transition to a more sustainable economy. However, in the exploration and production of natural gas, there are some significant environmental, safety and social issues to address. As part of managing its environmental responsibilities, Woodside has developed an environmental and safety management system to a standard equivalent to ISO14001 and ISO4801. These management systems have facilitated improvement in occupational health and safety, and environmental performance, as demonstrated by improvement in occupational health and safety accident data, and decrease in nitrogen oxide and hydrocarbon air emissions at the Karratha Gas Plant. // 11
Contact us If you would like to know more about how AMP Capital can help you, please visit ampcapital.com.au, or contact one of the following: Financial Advisers Personal Investors Wholesale Investors AMP Capital s Adviser Services team on 1300 139 267 Your Financial Adviser AMP Capital s Client Service team on 1800 658 404 Important note: Investors should consider the product disclosure statement available from AMP Capital Investors Limited (ABN 59 001 777 591) (AFSL 232497) for the AMP Capital Sustainable Share Fund (ARSN 095 791 192) before making any decision regarding the Fund. Neither AMP Capital Investors, nor any other company in the AMP Group, guarantees the repayment of capital or the performance of any product or any particular rate of return referred to in this document. Past performance is not a reliable indicator of future performance. AMP Capital Investors prepares this document to provide investors with a broad understanding of the investments held by the Fund and endeavours to update the information contained in this document each quarter based on publicly available information. However, while every care has been taken in the preparation of this document, AMP Capital Investors makes no representation or warranty as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. This document has been prepared for the purpose of providing general information, without taking account of any particular investor s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided. // 12