Responsible Investment Principles

By supporting scholarships, research, or other major projects, gifts to RMIT have the potential to impact the lives of students and our community for many years to come. Funds donated to the university for a particular purpose are distributed in accordance with donor’s stated intentions e.g. scholarships, bursaries, research, facilities, specific projects etc. Funds donated to the ‘university’s highest priorities’ are distributed to areas aligned to University strategy deemed in greatest need of support.

The University’s Impact Report showcases the transformative impact of philanthropy.

The University invests through a ‘pooled funds’ structure, where investments are not directly held by the University. Pooled funds are those where there are several different types of investors whose money is ‘pooled’ and invested together. This structure provides the University with access to several different types of asset classes that are normally only available to large-scale investors, which would otherwise be very expensive and difficult for the University to invest in on its own.

The entirety of the RMIT funds are invested in two responsible investment products:

• Russell Investments Sustainable Global Shares ex Fossil Fuels Fund: a fund that invests in a broad range of global shares, with a 60% reduced exposure to carbon emissions compared to the MSCI ACWI ex Australia Index. Designed with Russell Investments’ robust decarbonisation strategy, the Fund uses a combination of carbon footprint, fossil fuel reserves, a proprietary green energy ratio and environmental, social and governance (ESG) scoring to determine the companies and their weighting within the Fund. The Fund excludes companies with fossil fuel reserves, as well as companies with significant involvement in fossil fuels. In addition to the decarbonisation strategy, other controversial industries are excluded including tobacco, cluster munitions, anti-personnel mines and nuclear weapons. The Fund’s portfolio is positively tilted towards companies with higher than average material ESG scores and will continue to evolve to reflect best practice in sustainable investing.
• Russell Investments Australian Responsible Investment ETF: a fund that invests in Australian shares and trusts listed on the ASX that also excludes companies with fossil fuel reserves. The fund is weighted towards companies that demonstrate positive ESG characteristics after negatively screening for companies that have significant involvement in a range of activities including tobacco, gambling and controversial weapons. 

The use of pooled funds means that direct investment decisions, such as whether to buy the shares in an individual company are not made by the University. Instead, RMIT works with an asset consultant to set parameters on the Environmental, Social and Governance (ESG) impacts of its investments. The asset consultant then assists the University in finding suitable investment products that best match the University’s ESG parameters.

Additionally, RMIT utilises a small component of its philanthropic funding to undertake ‘impact investing’ which is an investment designed with the intention of generating a measurable, beneficial social or environmental impact alongside a financial return. In 2019 RMIT began working with Skalata Ventures, a not-for-profit organisation that runs an independently funded seed program to scale and grow early-stage companies into significant and sustainable businesses. This fund supports future pathways and seed investment for the start-up community such as those which are developed through the RMIT Activator program.  

Since the Responsible Investment Principles were approved in March 2017, we have commenced the implementation.  We have established definitions behind our principles to ensure that the investment market understands our requirements and we can report in a consistent manner. For example, we define fossil fuels related activities as including coal (coking and thermal), oil, natural gas and peat. We define companies involved in the production of tobacco and associated products as those which generate ≥10% of revenue from these related activities.

The Russell Investments Australian Responsible Investment Exchange Traded Fund (RARI) was established by a number of ethical charities and organisations to screen for thermal coal, alcohol, gambling, tobacco, pornography and armaments. RMIT has been given a seat on the RARI Responsible Investment Committee, allowing us to drive further ESG outcomes. For example, we successfully pushed for the fund to divest from fossil fuel exposures, with RARI divesting from the Underground 200 at the end of March 2019.

We undertook a scan of the market to find a suitable international shares product which matched our requirements and was committed to evolving further over time. The Philanthropy Committee and Sustainability Committee worked together with independent ESG experts to find an appropriate investment vehicle. 

For example, in 2020 RMIT worked alongside its external investment manager Russell Investments to launch a new sustainable investment solution - the Russell Investments Sustainable Global Shares ex Fossil Fuels Fund (the Fund). The Fund goes beyond carbon reduction and seeks a fossil fuel free exposure, excluding companies with fossil fuel reserves and companies which derive 10% or more of their revenue from fossil fuel-related activities. The University moved to this new product on 1 January 2021, marking the final step in achieving RMIT commitment to ensuring that the portfolio minimises activities that have a material impact on climate change, including involvement in fossil fuels as outlined in the Responsible Investment Principles.

RMIT’s principles are published on both here on our public website and in our public reporting in order for the University to remain open and transparent. The metrics to track these principles can be found in the latest Sustainability Annual Report.

'Where practicable' means that we will make every effort to implement the principles. However, there may be circumstances where we simply cannot practically address every issue.

For example, the principles state 'where practicable, the portfolio minimises activities that have a material impact on public health and wellbeing'. It is well understood that there are many health issues surrounding tobacco and that no level of tobacco is safe for consumption. It is also easy to identify and exclude any companies that are manufacturing tobacco. However, while overconsumption of sugar is also a health issue, it is much more complicated to identify and exclude companies that are responsible for the society’s overconsumption of sugar.

‘Where practicable’ is never designed to act as a loophole to avoid addressing the real intent of the principles. Rather, it reflects the real-world constraints of meeting those principles when dealing in a complex investment market.

The Responsible Investment principles have been endorsed by both the Sustainability Committee and Philanthropic Committee, and then approved by the Vice Chancellor’s Executive and University Council. This high-level commitment mandates that the principles be implemented by the Philanthropy Committee. 

RMIT considers investment returns to be extremely compatible with our responsible investment objectives. Responsibly invested Australian share funds have outperformed their equivalent mainstream funds over the last ten years (Responsible Investment Association Australasia, Benchmark Report 2017). These investment principles, including the principles of responsible investment, create good investment returns and reduce risk. 

RMIT is committed to ensuring that it makes socially responsible investment decisions that align with RMIT values. The Responsible Investment Principles guide the incorporation of ESG considerations into the management of the investment portfolio of RMIT’s philanthropic funds whilst ensuring that investment management practices achieve strong financial outcomes for the University. 

Absolutely, RMIT is a global leader in climate action, taking practical steps and innovative projects to become carbon neutral by 2030 and adapting to climate risks. The University also supports our local and international communities and partners to transition to a low carbon future. At the end of 2020, RMIT achieved a 60% reduction in greenhouse gas emissions (from a 2007 baseline). This was realised by undertaking major campus energy efficiency upgrades, installing on-site renewables and leading two large-scale renewable energy purchasing groups with the City of Melbourne. For more information on our journey to carbon neutral visit https://www.rmit.edu.au/about/our-values/sustainability/carbon-and-climate

RMIT is proud to announce that as of 1 January 2021, the University has fully reduced the exposure of its Philanthropic Funds to carbon emissions and has excluded companies with fossil fuel reserves, as well as companies with significant involvement in fossil fuels from all investments. This marks the final step in achieving RMIT’s commitment to ensuring that its investment portfolio minimises activities that have a material impact on climate change, including involvement in fossil fuels as outlined in the RMIT Responsible Investment Principles.

University Philanthropic funds are very different from superannuation funds in terms of scale, purpose and investment approach. For example, UniSuper currently has around $60 billion in net funds under management, with the sole purpose of supporting the retirement of people in the higher education sector.

For universities, philanthropic investments are targeted towards outcomes specified by the donor and follow the university Philanthropic and Fundraising Policy. Usually, these investments are smaller in scale than the amount of money invested by superannuation funds. Superannuation and larger scale funds have greater control over the way the money is invested. 

The Principles for Responsible Investment (PRI) is the world's leading proponent of responsible investment. The PRI works with its international network of signatories to put the six Principles for Responsible Investment into practice.

Its goals are to understand the investment implications of environmental, social and governance issues and to support signatories in integrating these issues into investment and ownership decisions.

The six Principles were developed by investors and are supported by the UN. They have more than 1,400 signatories from over 50 countries representing US$59 trillion of assets.