sustainable growth

Any company that:

• derives any revenue from the mining or exploration of thermal coal^{^^}; any revenue from the extraction, production, refining of conventional and unconventional oil and gas; has any total volume proved and probable reserves of thermal coal and metallurgical coal; or, has any total volume of proved reserves of oil and gas;
^{^^}Thermal coal includes lignite, bituminous, anthracite and steam coal and its sale to external parties. It excludes: revenue from metallurgical coal; coal mined for internal power generation (e.g. in the case of vertically integrated power producers); intra-company sales of mined thermal coal; and revenue from coal trading. The data received from our external provider for the purpose of oil and gas screening aggregates conventional and unconventional oil and gas reserves of each company screened.

• derives 15% or more revenue from the generation of electricity from fossil fuels; 15% or more revenue from oil and gas pipelines and/or transportation; 15% or more revenue from the distribution and/or retailing of conventional and unconventional oil and gas*; or

• derives 15% or more revenue from equipment and/or services for the exploration and production of conventional and unconventional oil and gas*; or

• derives 50% or more revenue from indirect services to the fossil fuel sector. For example, the provision of specific materials, contracted services and transportation.*

* Transitioning companies - Even if one or more of these Sustainable Growth exclusion criteria is met, a company may still be permitted for investment where it is determined to be a transitioning company. Transitioning companies are those that can demonstrate a clear climate change transition path aligned to the Paris Agreement defined through 10% or more revenue derived from renewable energy generation and either a Science-Based Target¹ or Transition Pathway Initiative¹ score of 2°C and below. The option holds a very limited number of companies within the private equity asset class that generate >50% of their revenue from the provision of services to the oil and gas sector. While some of these assets have been exited to-date, due to the illiquid nature of the assets, further time is required to exit the remaining assets. This is anticipated to occur by July 2025.

¹For more information about these terms see sciencebasedtargets.org or transitionpathwayinitiative.org.

Any company that:

• produces or manufactures tobacco and tobacco related products, including traditional and alternative smoking products, such as e-cigarette devices and vapes; or
• derives more than 15% or more revenue from the manufacture or supply of key products necessary for the production or manufacture of tobacco products; or the wholesale or retail of tobacco or tobacco products.

Any company that owns or operates active uranium mines.

Any company that manufactures whole weapon systems or components developed for exclusive use in cluster munitions, anti-personnel mines, biological or chemical weapons.

Any company that manufactures whole weapon systems or components developed for exclusive use in nuclear weapons.

Any company that derives 5% or more revenue from military weapons production, civilian firearm production or retailing.

Any company that provides the services of asylum seeker detention centres or for-profit prisons, e.g correctional facilities.

Any listed company identified by our data provider as having a "red flag" related to human rights or labour rights breaches². Breaches may relate to:

Human rights 

• Support for controversial regimes
• Freedom of expression and censorship
• Other human rights abuses and adverse impact on a community.

Labour rights

• Labour management
• Employee health and safety
• Collective bargaining and unions
• Discrimination and workforce diversity 
• Supply chain employee relations standards.

²For incident-based exclusions e.g. human, labour rights and environmental breaches, HESTA may exercise discretion to not exclude a company or to re-invest in a company following a period of exclusion if a company can demonstrate through engagement that it has addressed the cause of the previous incident/s and the associated risk has been mitigated.

Any listed company identified by our data provider as having a 'red flag' related to environmental breaches². Breaches may relate to:

• Land use and biodiversity
• Toxic spills and releases
• Energy and climate change
• Water management
• Operational non-hazardous waste
• Environmental impact of products and services
• Supply chain environmental impacts.

²For incident-based exclusions e.g. human, labour rights and environmental breaches, HESTA may exercise discretion to not exclude a company or to re-invest in a company following a period of exclusion if a company can demonstrate through engagement that it has addressed the cause of the previous incident/s and the associated risk has been mitigated.

Any listed company that scores a ‘CCC’ ESG rating. Companies are ranked from best (AAA) to worst (CCC).

Ratings are determined by how well a company manages material environmental, social and governance (ESG) risks compared with sector peers. 

For more information on ESG ratings, visit msci.com/sustainable-investing/esg-ratings.

Any company that derives 10% or more revenue from the production and/or distribution of palm oil and has less than 50% Roundtable of Sustainable Palm Oil (RSPO) certified oil.

The RSPO certification requires companies to adhere to a strict set of principles and criteria for sustainable palm oil production.

Any company that derives 5% or more revenue from the operation, licensing, and provision of key products or services fundamental to gambling operations.

Any company that derives 10% or more revenue from the long-distance transport and/or export of animals for the purpose of selling live animals for slaughter, husbandry and breeding subjects, including specialised transportation services.

Applicable to global securities, any country that scores a ‘CCC’ ESG rating. Our data provider scores and ranks countries from AAA (best) to CCC (worst). Ratings are determined by how well a country manages underlying factors across environmental, social and governance (ESG) issues. This exclusion also captures sub-national local authorities (such as states and provinces) who are exposed to similar ESG risks as countries. 

For more information on ESG ratings, please visit msci.com/sustainable-investing/esg-ratings.