Extension of negative screens
Revolution added three new negative screen categories including Gambling, Adult Entertainment and Human Rights Violations. Screens are set for both direct and indirect exposures. Any direct exposure to these controversial sectors and/or issues are excluded from Revolution’s investment universe. Additionally, indirect exposures also apply and are based on revenue thresholds.
Introduction of positive screens into Revolution’s ESG program
Positive screens have been introduced, including Healthcare, Education, Social Infrastructure and Green Initiatives. Consistent with Revolution’s corporate social responsibility and capital stewardship philosophy, transactions that are involved in these sectors and/or activities are viewed favourably and would be promoted ahead of other investments outside of the positive screens, all else being equal.
As such, Revolution will support investment in the aforementioned sectors. Every investment is still subject to strict credit lending criteria, regardless of being on the positive screening list.
First Asset Backed Securities (ABS) warehouse with green incentives
The ABS warehouse funded by Revolution for many years provides consumer motor vehicle loans which receive significant support from the Clean Energy Finance Corporation (CEFC). In order to encourage the financing of electric vehicles (EV’s), CEFC have provided A$40m of funding with incentives to both the issuer, and the underlying borrowers, through cheaper financing rates with increasing proportions of EV’s in the warehouse. The additional green financing tranche has also required the improvement of investor disclosure with CO2 emissions now disclosed for every vehicle financed in the transaction, setting a benchmark for reporting that can be applied to other vehicle finance transactions in the Revolution portfolio.
First PRI assessment report
Revolution has received its first formal PRI Assessment Report with a 3-star rating (on a scale of 1-5 stars), with similar outcomes across its key asset classes being corporate private debt and securitised assets. The key strengths highlighted by the PRI assessment were linked to Revolution’s ESG approach and policy in the pre-investment phase particularly the incorporation of ESG in credit quality analysis, the breadth of parties subject to ESG assessment in Revolution’s process and materiality analysis (coverage of assets).