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Corporates have a critical role in social, environmental outcomes

Australia's publicly listed companies are increasingly playing a more active role in creating a more sustainable future, but "glaring inadequacies" still remain.

That's according to impact investment company Melior's inaugural Australian Impact Report which highlights the growing awareness among corporates of the need to improve social and environmental outcomes as investor demands skyrocket.

"There's probably never been a more important time for public companies to step up and help contribute to solutions that support positive environmental and social outcomes," Melior chief executive Lucy Steed said.

"We are definitely seeing, from the discussions we are having with companies, greater acceptance that social and environmental considerations need to be paramount in their decision making.

"Not only are investors demanding more positive action, there is a sense from many companies now that they should deploy their capital in a manner that helps meet the challenges we face as a society."

While there is a lack of disclosure around gender pay gap data and pay equality among ASX 300 companies, Melior believes Wesfarmers demonstrates leadership in this area.

The company has targets in place for female executives and board members, as well as a gender pay gap target of +/-5%.

Melior also celebrated the work of property group Dexus, which has invested in sustainable infrastructure and green buildings, as well as New Zealand energy groups Meridian and Mercury for their work in reducing inequalities.

However, the impact investment company also identified "glaring inadequacies" when engaging with corporates during the year.

These include poor levels of data on workforce inequalities and a lack of disclosure of greenhouse gas emissions by nearly two thirds of ASX 300 companies, it said.

In its first year of operation, Melior conducted 67 advocacy meetings with a range of ASX-listed companies, with three key themes emerging following its engagement with corporates: gender equality, reduced inequalities and climate action.

"Gender equality and broader inequalities such as modern slavery, inadequate workplace safety and lack of indigenous reconciliation are key societal issues which we believe corporate Australia has a critical role to play in addressing," it said.

"We also estimate that the Scope 1 greenhouse gas emissions of the ASX300 are equivalent to approximately one third of Australia's national emissions, highlighting the critical role that ASX companies have in driving forward emissions reduction and therefore climate action."

Melior launched in 2019 after founder Steed and chief investment officer Tim King identified a gap in the Australian market for a product that produced both financial and social return.

In its first year, the fund outperformed the benchmark ASX300 by 9.4%, with an absolute return of 1.8%. It was subsequently ranked by Rainmaker as one of the top 10 Australian large cap equities managers.

In its second year, figures to August show the fund outperformed the index by 11.2%, with an absolute return of 6.4%.

"These figures prove that investing for impact does not come at the expense of financial performance," Steed said.

"In fact, we are increasingly seeing evidence that there is a strong alignment between outperformance and socially and environmentally responsible investment practices."

Read more: ASXLucy SteedMelior Investment ManagementAustralian Impact ReportDexusMercuryMeridianRainmakerTim KingWesfarmers
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