Wealth Manager Denies Commonwealth Ethical Fund over Misconduct

BREAKING NEWS – According to Wealth manager Perpetual Ltd, it denied Commonwealth Bank of Australia of its ethical fund worth A$1.3 billion ($933.6 million). This is because of the revelations of corporate misconduct.

The action of the shares managers could invite other stock pickers, who are socially minded, to do the same thing from the “Big Four” banks of Australia on ethical grounds.

From the previous years, CBA went into numerous scandals that involve breaches of anti-money laundering laws, fees charged to dead clients and rate-rigging charges.

As revealed in an investor update, the divestment of Perpetual put further pressure on the banking sector of Australia to make changes of its act amid the revelation of a powerful inquiry to air bribery allegations, board-level deception, and fee-gouging.

FinanceBrokerage - Breaking News Royal Commission Tests Ethical Screens of SRI funds
Royal Commission is challenging the SRI Funds’ ethical screens

The decision of Perpetual relates to its ethical Australian share product. Moreover, the Australian share product has included CBA as one of its largest holdings recently in April.

Perpetual’s ethical fund filters were tightened on the beginning of June, according to its spokesperson.

“This included widening the definition of its governance (socially responsible investment) filter to capture more instances of corporate misconduct,” the spokesperson said.

In an interview, Perpetual said that they have discovered an additional 25 companies. However, CBA refused to add another on the disclosures of Perpetual.

According to the Global Sustainable Investment Review’s biennial survey, the “sustainable, responsible and impact” (SRI) investment sector contained $23 trillion worldwide at the end of 2016.

Between 2014 and 2016, the SRI investments rapidly surged from $148 billion to $516 billion in Australia.

Breaking News: Royal Commission Tests Ethical Screens of SRI funds

Meanwhile, Royal Commission, Australia’s most powerful type of inquiry, has been revealing poor practices since the start of the year. Furthermore, the Royal Commission has been challenging the SRI funds’ ethical screens. The test tends to highlight certain issues including the exposure of stocks to alcohol, tobacco, gambling, and, uranium.

As per Helga Birgden, an Investment consultant Mercer’s global business leader of responsible investment, the mainstream funds have been thoroughly assessing issues on governance.

“Not because they label themselves as ethical or socially responsible, but because these are genuine and material investment risks,” Birgden said.

Based on the quasi-judicial inquiry, Westpac Banking Corp, Australia, and New Zealand Banking Group, National Australia Bank as well as with fund managers IOOF Holdings and AMP exhibited bad practices.

Charges such as A$4 billion market value and some high-level resignations in AMP were brought by the revelations

In May, Australian Ethical Investments was dissociating its holdings in AMP.

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