Australian Ethical Investment (AEF) 2024年年度報告「ASX」.pdf

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1、Annual Report 2024ContentsWelcome to the Australian Ethical Investment Limited (Australian Ethical)Annual Report for 2024.About the reportWe have included the performance for Australian Ethical and its wholly owned subsidiaries:Australian Ethical Superannuation Pty Ltd(Australian Ethical Super)and A

2、ustralian Ethical Foundation Limited(The Foundation),for the period 1 July 2023 to 30 June 2024(FY24)in this report.Our purpose is investing for a better world.This means that as well as striving to deliver great investment outcomes for our customers,we must also understand,measure and mitigate our

3、impacts on people,on animals and on the world around us.Our annual and sustainability reporting along with our FY24 Databook and 2024 Stewardship Report will together meet the requirements of the Global Reporting Initiatives(GRI)Sustainability Reporting Standards and continue our long history of pro

4、viding best practice reporting on how we make money matter.We have continually evolved our reporting to reflect developing global standards.In 2017 we mapped the alignment of our listed share investments to the United Nations Sustainable Development Goals.In 2018 we released our first annual Task fo

5、rce on Climate-Related Financial Disclosures Report(TCFD)and in 2020 we added a statement to address our approach to Modern Slavery concerns.Since 2002 we have used the GRI reporting framework to help us track and report our impacts.This year we are combining our annual and sustainability reports in

6、to one document as we move towards an integrated reporting approach.KPMG has audited the financial statements within our Annual Report and provided limited assurance over a selection of data points.Data points that are covered by the limited assurance are identified in the document.KPMGs assurance o

7、pinion is available on pages 178 to 179.We welcome your feedback on our reports.Please contact Karen Hughes,Chief Risk Officer&Company Secretary,Australian Ethical Investment Limited on 0406 753 535 or at .au.Our Corporate Governance Statement is available at .au/shareholder/corporate-governance/Ack

8、nowledgement of Country Australian Ethical has offices on Gadigal country in Sydney,a part of the Eora Nation,and on Wurundjeri Woi-wurrung and Bunurong Boon Wurrung country in Melbourne,a part of the Kulin Nation.Australian Ethical acknowledges the Traditional Owners of the country on which we work

9、.We recognise and celebrate their continuing connection to land,waters and culture.We pay our respects to Elders past and present and thank them for protecting Country since time immemorial.About us 4Message from the CEO 8Message from the Chair 10Financial and sustainability highlights 12Awards and

10、recognition 14CIO report 18Key management personnel 21Annual Financial Report 24 Directors report 26 Remuneration report 53 Auditors Independence Declaration 90 Statements of comprehensive income 92 Statements of financial position 93 Statement of changes in equity 94 Statements of cash flows 96 Not

11、es to the financial statements 97 Directors declaration 128 Independent auditors report 129Sustainability Report 134 We are ethical investors 138 Our portfolio is aligned to our values 140 Sustainability metrics 144 Reporting to the GRI 146 Our approach to climate change(TCFD)148 People with purpose

12、 166 The Australian Ethical Foundation 172 Memberships and certifications 174More information 176Auditors limited assurance opinion 178Shareholder information 181Company directory 182ANNUAL REPORT 20243Eventually we will reach a tipping point where money is a force for goodAn equitable future for pe

13、ople,planet and animals.then we will begin to see these changes.Environmental and social costs and benefits get baked into investment valuationswhich becomes a means to address systemic riskOur efforts will scale up and multiplyas markets reward not only financial return for investors,but also the p

14、ositive and negative outcomes for all stakeholdersWe will attract more capitalgrowing our influence and foundation giving,encouraging others to follow our exampleOur portfolios will benefitbecause our approach leads us to investments that are well positioned as low carbon and sustainable transitions

15、 accelerate“We are putting our capital and influence behind a low carbon future.We believe this transition can be achieved without compromising investment returns or our ethical standards.”Ludovic TheauChief Investment Officer Our Theory of ChangeWe believe if we do all these things.Our purpose is t

16、o invest for a better worldWe believe investing can deliver both attractive investment returns while also influencing progress towards a better future for the planet and all its inhabitants.“Our Theory of Change framework orientates us towards the best things we can be doing and helps us understand

17、when our activities are moving the dial.”Alison GeorgeHead of Impact&EthicsIntentionally allocate capitalto investments with net positive activities according to our Ethical Charter and CriteriaUse our position as investorsto call for and catalyse positive changeProvide consequences(positive and neg

18、ative)for ethical performanceSignal our example and collaborateto amplify our messageANNUAL REPORT 2024452021Australias fastest growing super fund+highest NPS2020,2021,2022,2023Finder Green Superannuation Fund of the Year2014First Australian public company awarded B Corp status2015 Commence financia

19、l adviser channel Money Management Responsible Fund of the Year2022 Christian Super integrated in adding 28,000 members+$1.93bn FUM RIAA Responsible Investment Leader B Corp Best for the World (Customer&Governance)2023 Morningstar Highest Honours ESG Commitment Level New record B Corp score2024 Aust

20、ralian Growth Company Awards Financial Services Growth Company of the Year Award Top 5 super fund for member growth 2024 KPMG Super Insights Report Acquisition of Altius Asset Management to add around c$2bn to FUM in FY25$1bn$5bn$10bnOur journey1995Company changes name to Australian Ethical1998Retai

21、l Super Fund launch2002Listed on the Australian Stock Exchange2008Infinity Award Winner2011Ethical Investor Fund of the Year$200m2000Company launches grant program,giving away 10%of before tax profits to charitable organisations1986Company formed and Australian Ethical Charter set38 years of growing

22、 good moneyANNUAL REPORT 202467Our goal,we stated,was to position ourselves to capture the once-in-a-generation opportunity represented by the quantum shift towards responsible investing.Since this time,weve been assiduously investing in our strategy.Building out our infrastructure and ethical inves

23、ting capability to support a broader product mix and greater scale.Digitising and enhancing our online customer experience while also uplifting our distribution and call centre offerings.Investing in our brand,to ensure investors know who we are and understand our unique difference.This includes bro

24、adening into different asset classes and different solutions as the size and diversity of our customer base passes 130,000 and continues to grow.This will inevitably lead to more partnerships and deals,like our successful integration with Christian Super in 2023,the acquisition of sustainable fixed

25、interest investor Altius Asset Management we announced in May 2024,and the collaboration with specialist investment firm InfraDebt we forged in February.We have much to celebrate when we reflect on the last five years.From less than$3.5 billion in funds under management(FUM)at 30 June 2019,we reache

26、d the milestone of$10 billion in March of this year.Revenue has grown 2.5 times over the five years to over$100 million in FY24,even while we continued to deliver fee reductions to our customers.We know we couldnt have achieved what we have to date and what we are aiming for in the future without th

27、e support of all our stakeholders including our shareholders,investors,super fund members,and the entire Australian Ethical team.As we broaden and grow our influence,our purpose remains unwavering,guided by our Ethical Charter,with our Theory of Change at the heart of everything we do.Message from t

28、he CEOJohn McMurdo,Chief Executive Officer&Managing DirectorWith 2024 seeing further record-breaking temperatures,and more extreme weather events impacting communities world-wide,its clear that we still have a long way to go to thwart the extreme scenarios scientists have foreshadowed if warming isn

29、t slowed to less than 1.5 degrees.But its also important to acknowledge that much progress has now been made and we see that globally there is more than twice as much investment in clean energy as in fossil fuels1.More than 140 countries have signed up to net zero carbon commitments by 2050,covering

30、 more than 90%of global Gross Domestic Product2.It seems that the message is finally getting through.The progress to date reinforces the importance of maintaining our focus and staying the course.A new greenhouse gas emissions reduction target will be set by the Australian Government later this year

31、 as part of this countrys Nationally Determined Contribution(NDC).This target needs to be ambitious,as it represents the work we all need to do,collectively as nation,over the next five years to the end of 2030 to slow climate warming to safe levels.Australian Ethical has an important role to play,n

32、ot only in understanding the levers that need to be pulled to meet our new energy ambitions,but also to help guide industry,governments and even households,through our growing customer-base of superannuants and investors to get to where we need to go.Climate Policy Advocacy is a strategic stewardshi

33、p priority for us now,alongside the work we are doing to turn off financing for unsustainable expansion of fossil fuels,stopping livestock-driven deforestation in Australia,reducing building sector emissions,and advancing alternatives to animal research.Being at the forefront of influencing and advo

34、cating for our new energy and low carbon future means we can better understand the risks and opportunities from an investment perspective.Investing in companies and assets we believe are part of a sustainable economy,and restricting investments in companies that arent,underlies the promise we make t

35、o investors to consider both financial value creation and outcomes for people,planet and animals.We know there is latent demand for our way of thinking and investing.The latest Responsible Investment Association Australasia data shows that almost 90%of Australians expect their super,their investment

36、s,and the money in their bank accounts to be invested responsibly.Eighty per cent say its important to them to have a super fund,bank or investment that delivers a positive impact in the world.And 75%said theyd consider changing providers if their current fund didnt align with their values3.In 2020,

37、we could see this momentum building.In the wake of the devastating East Coast bushfires and as COVID raged around us,we took the opportunity to carefully reflect on what would come next for Australian Ethical.In 2021,we announced our intention to further amplify our purpose by building a much bigger

38、,more impactful business,through a significant reinvestment program aligned to our five strategic pillars.Our goal,we stated,was to position ourselves to capture the once-in-a-generation opportunity represented by the quantum shift towards responsible investing.We explained this investment would hav

39、e an impact on short term profit,but our approach received broad endorsement from our shareholder base.1 Overview and key findings World Energy Investment 2024 Analysis-IEA2 Status of net-zero carbon emissions targets(ourworldindata.org)3 Budak,Z.,Samarakoon,N.&Sammut,P.2024,From Values to Riches 20

40、24:Charting Consumer Demand for Responsible Investing in Australia,Responsible Investment Association Australasia,Melbourne.9ANNUAL REPORT 20248Our dual purpose of investing for a better world while delivering financial returns is enshrined in our investment beliefs which are core to who we are and

41、our reason for existence.Message from the ChairSteve Gibbs,ChairIts been a year of milestones for Australian Ethical,headlined by our funds under management and revenue achievements.The continued growth and expansion of our influence in the last 12 months has been particularly satisfying unwavering

42、from our beliefs and core purpose to invest for a better world.This resolve enables us to take even more of a leadership role as an ethical investor in the year ahead,while navigating financial markets as the threat of climate change intensifies.The size and health of our business is an important pa

43、rt of our mission.We want to be a proof point for other companies and investors that money can do well and do good.Passing$10 billion funds under management in March and achieving$100 million in revenue at our most recent FY24 results were important milestones for Australian Ethical in the last year

44、.Whats perhaps most important is how we got there,and the way we continue grow.We continue to be an authentic ethical investor and a purpose driven company.This is evidenced in researcher Morningstars recognition we are one of only eight global leaders for ESG Commitment and confirmation from the Re

45、sponsible Investment Association Australasia(RIAA)as a Responsible Investment Leader every year since 2001.Equally pleasing is how we have continued to prioritise and uplift our customer,employee and broader stakeholder experiences,a result of a lot of hard work throughout the business.This is refle

46、cted in accolades in the last 12 months including the Top 3 Most Trusted Super Brand award from Roy Morgan,and confirmation of Australian Ethical as the highest-rated Certified B Corporation in Australia&Aotearoa.These accolades,along with our recent strong operating performance,have been achieved d

47、uring a time of changeable and at times challenging investment markets.While our long-term performance continues to show that investing ethically doesnt require forgoing investment returns,its important to acknowledge that our approach to investing might mean we dont end up at the top of the short-t

48、erm performance rankings.With equity markets rising to all-time highs in Australia and in the United States,our focus on valuation and not overpaying for companies has meant some of our competitors have achieved higher relative returns during the period.Despite the short-term fluctuations,I am proud

49、 that we continue to fulfil our promise to invest for a better world while delivering competitive long-term investment returns.Over 10 years our superannuation strategies have delivered returns which are close to or have exceeded their objectives,while our Emerging Companies and Australian Shares Fu

50、nds have outperformed their respective benchmarks over the long-term,delivering 12.4%and 12.5%respectively since inception.Our dual purpose of investing for a better world while delivering financial returns is enshrined in our investment beliefs which are core to who we are and our reason for existe

51、nce.To have the greatest possible impact we need buy-in from everyone other investors,policy makers,industry leaders and the broader society.The next 12 months will be pivotal in the journey towards global emissions reductions and the transition towards cheaper and cleaner renewable energy,particula

52、rly as the Australian government sets its Nationally Determined Contribution(NDC)target for the five years from 2030 to 2035.We understand that we must continue to make our voice heard on climate change,which is why Australian Ethical is taking a leadership role by pushing hard for science-based tar

53、gets and real-world change.There is no zero cost option to address climate change because the cost of unabated global warming will far exceed the cost of our actions today.11ANNUAL REPORT 202410Our listed share portfolio9 Scope 1 and 2 carbon intensity(tonnes CO2-e/$revenue),sustainable impact solut

54、ions revenue,and investment in renewables and energy solutions measures all relate to the listed companies whose shares we invest in across our funds and options for which we have relevant data.This should not be considered representative of individual funds or options which will have their own mix

55、of share and other investments.See page 176 for more information about this comparison.For our analysis we use sustainable impact criteria and revenue data from external sources which aim to measure revenue exposure to sustainable impact solutions and support actionable thematic allocations in line

56、with the U.N.Sustainable Development Goals(SDGs),EU Taxonomy of Sustainable Activities,and other sustainability related frameworks.More information available on page 176.10 We count one engagement where we engaged with a company on a topic or series of topics.There may be multiple activities within

57、that engagement.For example,our engagement with Westpac is counted as one engagement which included meetings,emails and co-filing a shareholder resolution.We may count two engagements with a company if there were separate activities on entirely separate topics.11 Our proactive engagement count inclu

58、des where we engaged directly with a company,government or other entity;we actively contributed to collective engagements(as distinct from simply signing on);we used a nominal advocacy holding to support shareholder resolutions;or we co-filed a resolution.Commitments to change are commitments made b

59、y the engaged entity after our engagement commenced,that reflect progress towards the ultimate objectives of the engagement beyond acknowledgment of an issue.They may be identified through e.g.direct company responses,company reporting or actions taken,changes to government policies or draft legisla

60、tion,or actions taken by industry associations.For examples of commitments,see our Stewardship Report:.au/why-ae/ethical-stewardship/12 Investments exited during the year due to ethical re-assessment.Not including companies excluded from initial investment.*Indicates FY24 metric included in KPMGs Li

61、mited assurance scope.Compared to a blended share market Benchmark of S&P ASX200 Index(for Australian and NZ shareholdings)and MSCI World ex Australia Index(for international shareholdings).Based on shareholdings at 30 June 2024 and analysis tools provided by external sources which cover 95%of the l

62、isted companies we hold shares in by value.See page 176 for more information about this comparison.Active stewardship 75%lower CO2 intensity compared to Benchmark9*2.3x4.7x5.2x2.3x revenue from sustainable impact solutions compared to Benchmark9 4.7x revenue from sustainable water&agriculture and po

63、llution prevention compared to Benchmark95.2x investment in renewables and energy solutions than Benchmark9*2 engagements resulted in divestment12 engagements for people,planet,animals10 proactive engagements 30%committing to change11*of investments ethically evaluated*Impact through our Foundation3

64、30+140+100%-75%10%yearly profits donated through the Foundation (after tax and before bonuses)$11m+allocated for impact through the Australian Ethical Foundation(since inception)$1.8m record allocation by AEI to the FoundationEnhancing our business platform to capture growth opportunityStrong moment

65、um in FY24 results#4NPS for super members679%Top quartile employee engagement8+57%$18.5m in underlying profit after tax+80%$11.8m in net profit attributable to shareholders Launch of Moderate Fund,Conservative Fund&Infrastructure Debt Fund Acquisition of Altius Asset Management5 Embedding scalable,f

66、lexible and professional business infrastructure+13%$10.44 bn FUMTop 5for super member growth474%134,000 customersAwards across multiple facets of business7Underlying cost to income ratio (improvement from 79%in FY23)$607m positive net flows$100.5m record revenue4 KPMG 2024 Super Insights Report,pub

67、lished May 2024,using statistics from APRA and ATO as at 30 June 2023.Based on growth in member numbers.5 Completion expected September 2024.6 Net Promoter Score raking of 4 out of 29.Investment Trends Super Member Engagement Report 2024.Independent research with 29 major super funds.7 See pages 14

68、to 15.8 Culture Amp survey June 2024.Top quartile for Financial Services Australia is 78%and above.See: REPORT 20241213Customer experience Roy Morgan 2023 Customer Satisfaction AwardsRetail Superannuation Fund of the YearCX AwardsBest Inclusive Customer ExperienceResponsible investment leadershipNam

69、ed 1 of only 8 global Leaders for ESG Commitment by Morningstar15 RIAA Responsible Investment Leader since 2021Highest scoring Certified B Corporation in Australia&Aotearoa NZ as at 13 July 2023 Growthnotice and SuperRatings assumes no obligation to update.SuperRatings use proprietary criteria to de

70、termine awards and ratings and may receive a fee for the use of its ratings and awards.Visit .au for ratings information.2023 SuperRatings.All rights reserved.15 Morningstar ESG Commitment Level:Report:1 February 2024.Australian Ethical was the only Australian organisation to achieve this recognitio

71、n.97 asset managers covered.Investments and superannuationTop 3 Most Trusted Super Brand13Financial Standard Investment Leadership Awards 2024Australian Ethical Diversified Shares Fund-Winner Australian Equities:High Active Risk 2024Mindful Money Awards 2024Australian Ethical Australian Shares Fund

72、Best Ethical Overseas FundRainmaker ESG Leader Rating 2022-202313 2023 Roy Morgan Trusted Brand Awards Report14 The rating is issued by SuperRatings Pty Ltd ABN 95 100 192 283 AFSL 311880(SuperRatings).Ratings are general advice only and have been prepared without taking account of your objectives,f

73、inancial situation or needs.Consider your personal circumstances,read the product disclosure statement and seek independent financial advice before investing.The rating is not a recommendation to purchase,sell or hold any product.Past performance information is not indicative of future performance.R

74、atings are subject to change without Awards and recognition ProductR.au Awards Best Retail Super Fund 2023GREEN SUPERANNUATION FUND OF THE YEAR?WINNERFinder Green AwardsSuperannuation Fund of the Year 2020-2023SuperRatings GOLD 2024For MySuper,MyChoice and Pension14Australian Growth Company AwardsFi

75、nancial Services Growth Company of the Year 2023ANNUAL REPORT 20241415Investment performanceManaged Funds returns to 30 June 2024#1 year%3 years%p.a.5 years%p.a.7 years%p.a.10 years%p.a.Fund performanceIncome Fund5.0 2.6 1.8 1.8 1.8Benchmark164.4 2.4 1.6 1.7 1.8Income Fund(Wholesale)5.0 2.6 1.8 1.9

76、n/aBenchmark164.4 2.4 1.6 1.7 n/aFixed Interest Fund3.2-2.6-1.2 0.5 1.2Benchmark173.7-2.1-0.6 1.3 2.2Fixed Interest Fund(Wholesale)3.4-2.4-0.9 0.9 1.7Benchmark173.7-2.1-0.6 1.3 2.2Balanced Fund6.9 2.6 5.4 6.2 6.4Benchmark189.2 4.9 6.2 7.1 7.3Balanced Fund(Wholesale)7.6 3.3 6.2 n/an/aBenchmark189.2 4

77、.9 6.2 n/an/aHigh Growth Fund9.5 4.4 7.1 8.2 8.5Benchmark1813.3 7.4 8.9 9.3 9.2High Growth Fund(Wholesale)10.0 4.9 7.8 9.1 9.5Benchmark1813.3 7.4 8.9 9.3 9.2Diversified Shares Fund9.5 4.0 6.9 8.0 8.4Benchmark1914.1 7.7 9.0 9.4 9.3Diversified Shares Fund(Wholesale)10.0 4.4 7.5 8.9 9.4Benchmark1914.1

78、7.7 9.0 9.4 9.3International Shares Fund17.8 8.8 10.8 10.7 10.2Benchmark2019.9 11.2 13.0 13.2 12.1International Shares Fund(Wholesale)18.2 9.2 11.5 11.6 n/aBenchmark2019.9 11.2 13.0 13.2 n/aAustralian Shares Fund10.9 0.9 8.3 8.3 9.9Benchmark2111.6 6.0 7.1 8.6 8.8Australian Shares Fund(Wholesale)11.5

79、 1.5 9.0 9.2 11.1 Benchmark2111.6 6.0 7.1 8.6 8.8 Emerging Companies Fund13.3-1.8 10.0 11.2 n/aBenchmark2212.4-2.2 2.9 5.4 n/aEmerging Companies Fund(Wholesale)13.8-1.4 10.5 11.8 n/aBenchmark2212.4-2.2 2.9 5.4 n/aHigh Conviction Fund4.0 n/an/an/an/aBenchmark2311.9 n/an/an/an/aPast performance is not

80、 a reliable indicator of future performance.References to wholesale funds indicate the class of pricing above a minimum investment threshold,which varies by fund.#After fees performance16 Bloomberg AusBond Bank Bills Index17 Bloomberg AusBond Composite18 Indices of underlying asset classes weighted

81、by the Funds Strategic Asset Allocation19 75%S&P/ASX 200 Accumulation/25%MSCI World ex Australia(NET)20 MSCI World ex Australia(NET)21 65%ASX 100/35%ASX Small Ordinaries22 S&P/ASX Small Industrials23 S&P/ASX 300 AccumulationNote:Where benchmarks have changed,we have melded them together.MSCI data is

82、 the property of MSCI.No use or distribution without written consent.Data is provided as is without any warranties.MSCI assumes no liability for or in connection with the data.For full disclaimer,please see .au/sourcesSuper and pension returns to 30 June 2024#1 year%3 years%p.a.5 years%p.a.7 years%p

83、.a.10 years%p.a.Accumulation options performanceDefensive Accumulation4.0 1.9 1.2 1.2 1.2Benchmark16 3.6 1.9 1.2 1.2 1.3Conservative Accumulation3.8 0.0 1.4 2.5 2.9CPI+1.25%5.3 6.0 4.6 4.0 3.7Balanced Accumulation6.8 3.0 5.6 6.5 6.8CPI+3.25%7.4 8.4 7.0 6.5 6.2Growth Accumulation7.8 4.1 6.4 7.2 7.5CP

84、I+3.75%7.9 9.0 7.6 7.0 6.7 Australian Shares Accumulation9.7 1.5 8.4 8.7 10.3Benchmark24 10.4 5.2 6.4 7.7 6.9International Shares Accumulation16.3 8.0 10.0 9.9 9.5Benchmark20 17.4 9.7 11.3 11.4 10.4High Growth Accumulation9.2 4.5 7.1 8.1 8.4CPI+4.25%8.6 9.6 8.1 7.6 7.21 year%3 years%p.a.5 years%p.a.

85、7 years%p.a.10 years%p.a.Pension options performanceDefensive Pension4.6 2.1 1.3 1.4 1.4Benchmark16 4.1 2.2 1.3 1.4 1.5Conservative Pension4.3-0.0 1.4 2.7 3.2CPI+1.5%5.5 6.1 4.6 4.0 3.7Balanced Pension6.5 2.3 4.8 5.7 6.3CPI+2.75%6.9 7.9 6.5 6.0 5.7Growth Pension8.5 4.0 6.8 7.8 8.2CPI+4.25%8.2 9.0 7.

86、6 7.1 6.7Australian Shares Pension10.0 1.4 9.1 9.5 11.0Benchmark24 11.6 5.8 7.1 8.4 7.6International Shares Pension17.4 8.4 10.6 10.4 9.8Benchmark20 19.6 10.9 12.7 12.8 11.6Super and Pension returns are calculated in compliance with APRA SRS702.It is the return that would have been achieved for a re

87、presentative member with a$50,000 balance and no contributions,after all administration and investment fees,taxes and other costs.24 ASX 300 Monthly Index(Accum.)(Net of tax and%admin fees)Net of tax and%administration fees160%is further evidence of our long-term value creation for shareholders,at a

88、 time when many of our peers are reporting negative TSR over the same time horizon.Revenue grew 2.5 times over the five years,reaching the milestone of$100 million in FY24.This was achieved while continuing to deliver fee reductions to our customers,lifting our quality of service and looking after t

89、he wellbeing of our employees.The success of this careful balance is evidenced by our healthy TSR,our enviable customer retention7 and customer satisfaction scores8,as well as our strong employee engagement metrics9.Since 2019,our underlying profit has almost tripled,an achievement supported by stro

90、ng organic and inorganic growth.Our funded customer numbers now stand at more than 134,000,from a base of 48,000 in 2019.Organic growth represents the majority,while the Christian Super transaction contributed a further 28,000 members in FY23.In FY24,we were again reported in the top five fastest gr

91、owing super funds7 and received the Financial Services Growth Company of the Year Award10.Our financial success also benefits the community through our grants to the Australian Ethical Foundation(The Foundation).In FY24 we donated a record$1.8m to The Foundation,which is a substantial increase on th

92、at donated in FY23 and represents a significant opportunity to increase our impact through our targeted giving programs.We are proud of our substantial achievements to date across all our business metrics and confident about the momentum for responsible investing we see as we head into FY25.7 2024 K

93、PMG Super Insights Report and dashboard(Data source:APRA Annual fund level superannuation statistics back series:June 2004 to June 2023(issued 13 December 2023)8 Net Promoter Score raking of 4 out of 29.Investment Trends Super Member Engagement Report 2024.Independent research with 29 major super fu

94、nds9 Culture Amp Employee engagement survey June 2024.Top quartile for Financial Services Australia is 78%and above: Australian Growth Company Awards,Financial Services Growth Company of the Year 2023ANNUAL REPORT 20243031Australian Ethical Investment Limited and its Controlled Entities Directors Re

95、portfor the year ended 30 June 2024We have continued to deliver against the pillars of our growth strategy.Our focus in the period has been on capability development,expanding our ethical product suite and building out a robust operational infrastructure to support our growth aspirations.Our key str

96、ategic highlights are set out below:Principled investment leadershipWe believe that ethical investing can deliver attractive returns while influencing progress towards a better future for people,planet and animals,and our experience over almost 40 years reinforces our conviction in this approach.Int

97、entionally allocating capital to investments with net positive activities including those that enable the transition to a sustainable low carbon economy,then using our position as investors to call for and catalyse positive change,benefits our portfolios as well as influencing broader change in the

98、long-term.To be a successful ethical investor requires a dual materiality lens ensuring our investable universe is firstly aligned to our Ethical Charter and then constructing portfolios suitable for the investment objectives of our various funds.FY24 has been a challenging year for markets,with sti

99、cky inflation and geopolitical unrest.The resulting uncertainty and rising equity valuations have contributed to mixed investment performance over the period.During the year we maintained a strong focus on valuation across all our portfolios,reluctant to chase momentum,and our approach to managing r

100、isk meant we favoured protecting investors from the potential downside while selectively participating in further upside scenarios.DiversificationAs we grow our portfolio,we actively seek out diversification opportunities within our ethical investment universe.We are continually looking for ways to

101、improve our risk-adjusted returns and portfolio protection to hedge against market volatility and inflation,providing resilience through evolving market conditions.In early FY24 we successfully launched two new Multi-Asset funds,the Moderate and Conservative Funds.These enhance our Multi-Asset offer

102、ing by providing more choice to customers with a lower risk tolerance and improving the product selection experience for advisers.In February we announced a new collaboration with specialist infrastructure debt manager Infradebt and launched our Infrastructure Debt Fund to provide capital for key Au

103、stralian projects spanning renewable energy,social infrastructure,and property with a social or environmental benefit.We see infrastructure debt as an important growth opportunity with debt capital likely to provide the lions share of the total capital required to meet Australias renewable energy tr

104、ansition target of 82%renewable energy generation by 203011.The Infrastructure Debt Fund aims to deliver solid risk-adjusted returns and contribute towards meeting these targets.We have seen around$23 million of new flows into this exciting offering since launching in February,which includes the tra

105、nsfer of existing Infradebt clients.In May we signed an agreement to acquire the sustainable fixed income asset management business Altius Asset Management from Australian Unity.When completed in early FY25,the deal will deliver an additional$2 billion in funds under management(FUM).Altius founders

106、Bill Bovingdon,Chris Dickman and Gavin Goodhand,widely regarded as leaders of sustainable fixed income investment in Australia,will be joining our investment team,resulting in a sustainable fixed income team of seven,as well as an expanded bond fund portfolio,and Australian Unity becoming one of Aus

107、tralian Ethicals largest clients.Other notable hires in the year included Natalie Tam as Portfolio Manager,Systematic Equities,and Adam Roberts as Head of Private Markets.With two decades of experience in Australian equity markets,Natalie is responsible for Australian Ethicals Diversified Shares and

108、 International Shares funds and for building out a systematic equities platform that will become an increasingly integral part of our overall investment offering.Joining in June,Adam has held various senior investment roles at Macquarie,including Global Head of Strategy,and was most recently the Aus

109、tralian Head of Infrastructure and Real Estate at Cerberus Capital Management.In his new role,Adam will be responsible for the development,delivery and execution of the Private Markets portfolio.We have also added a Senior Investment Operations Manager and three experienced analysts to further round

110、-out our investment capability.Ethical assessment is a key aspect of our unique investment process,and in January Dr Ella Robinson joined as Senior Impact&Ethics Analyst.Ella has deep expertise in public health;she previously worked as a post-doctoral researcher investigating the role of responsible

111、 investment in driving food industry accountability for heath.In FY24,our ethical product offering was recognised by a number of awards and accolades.We won the Australian Equities:High Active Risk 2024 category in the Financial Standard Investment Leadership Awards 2024(Australian Ethical Diversifi

112、ed Shares Fund);and the Best Ethical Overseas Fund in the Mindful Money Awards Aotearoa 2024(Australian Ethical Australian Shares Fund).Our super fund was ProductR.aus Best Retail Super Fund for 2023 and remains Finders Green Superannuation Fund of the Year for 2023.Our leading approach was recognis

113、ed by Morningstar when we were named in January 2024 as 1 of only 8 global Leaders for ESG Commitment12;by Rainmaker as an ESG Leader;and again by RIAA in their select list of Responsible Investment Leaders.We were also proud to be the highest scoring Certified B Corporation(B Corp)in Australia&Aote

114、aroa NZ at our last certification on 13 July 2023.In FY25,we will focus on integrating Altius and delivering key strategic,transformative initiatives to continue our investment capability uplift.We will leverage the expertise of our newly enhanced internal capabilities for future product development

115、,particularly in Private Markets and Systematic Equities,as well as explore new thematic investment opportunities.11 Climate Change Act 202212 The Morningstar ESG Commitment Level:Our assessment of 108 asset managers white paper.2023 Morningstar,Inc.All rights reserved.1.Principled investment leader

116、shipDeliver superior risk adjusted returns over the long-term,and be a powerful influence in ethical investing3.Compelling client experienceDeliver a seamless,modern and engaging client experience to help support the creation of a better financial future for customers,and provide accessible and affo

117、rdable investment solutions2.Advocates for a better worldFoster a coalition of co-investors in the cause for a better world.A bold voice harnessing people power,strength of community and values aligned organisations4.Impactful businessShowcase the duality of a deeply purpose driven and commercially

118、successful business at scale and inspire or influence organisations and society to do well and to do good.Executing against our strategy in FY24Purpose:Investing for a better world Leadership&Innovation:differentiated,purpose driven&high-performance cultureANNUAL REPORT 20243233Australian Ethical In

119、vestment Limited and its Controlled Entities Directors Reportfor the year ended 30 June 2024Advocates for a better worldAs we expand our asset class coverage to include fixed income and private markets for example,we will be able to advocate for money as a force for good in more segments of the econ

120、omy.In December,to help us to deliver on this promise,we embedded our Theory of Change13 into our Investment Beliefs.Our Investment Beliefs encapsulate our investment style,approach and how we think we can create value for customers.Though a guiding document like this is typical for investment firms

121、:most investment firms do not create value that is both financial and ethical.So,it is critical to represent this dual lens in the documentation of our Investment Beliefs.We also sought to provide further clarity to customers about one of the key levers of our Theory of Change our distinctive ethica

122、l approach to capital allocation.In FY24 we refreshed our customer communications on ethics,producing for the first time a standalone summary Ethical Guide.Over the year,the Impact&Ethics team also undertook activities in our four existing stewardship priority areas turning off finance for the unsus

123、tainable expansion of fossil fuels,stopping livestock driven deforestation in Australia,reducing building sector emissions,advancing alternatives to animal research and a new priority area of climate change policy.During a periodic review of our stewardship priority areas,we determined that advocati

124、ng for ambitious climate policy is a key opportunity where our experience in this field and credibility could lend weight.Furthermore,ambitious,and effective climate policy serves to underpin all aspects of our Ethical Charter.We see an immediate and compelling opportunity to coalesce the voices of

125、investors,companies,and the public,around Australias next carbon target.This must be both ambitious and science-led.We see this outcome as critical for all stakeholders,as an orderly 1.5-degree transition is the best outcome for living beings and the least cost alternative for the economy.Whats more

126、,acting with foresight,pace and providing policy certainty will provide Australians with the best chance to seize opportunities and attract capital.As part of our continuing efforts to turn off financing to the unsustainable expansion of fossil fuels,we co-filed climate-focused shareholder resolutio

127、ns at the 2023 NAB and Westpac annual general meetings.Both received substantial and increased support empowering our calls for progress.The Westpac resolution,calling for a broader application of policies to shift customers to greener energy sources,received 21.5%of proxies in support,more than dou

128、ble the level of the previous year.The NAB resolution received four times the investor support of the prior years climate resolution,with more than a quarter of proxies voting in favour.NAB subsequently released expectations for customer climate transition plans which respond to our engagement asks.

129、While there is more to do to turn off expansionist funding,this progress and the level of support is pleasing.Following continued engagement which we led,Boral committed to improve their practices against the CA100+benchmark lobbying indicators and AdBri commenced disclosure on lobbying activities f

130、or the first time in 2024.Over the year,we engaged14 more than 330 companies(or other entities)seeking progress on ethical issues.Of these,more than 140 were proactive engagements15:including direct interactions,where we actively contributed to a collective engagement;co-filings;or shareholder votin

131、g through nominal advocacy holdings.Of proactive engagements,more than 30%committed to or made a positive change this year16.We made two divestments on ethical grounds17.In the period we voted on 99.25%of votable meetings.396 meetings were voted in total.Of these,17.68%were cast against management r

132、ecommendation.More detail will be available in our Proxy Voting Report for FY2418.Along with the assessments by Morningstar,B Corp,RIAA and Rainmaker covered earlier in this report19,our ethical approach was recognised by Banks for Animals,who placed us in the top 5 of 80 global financial institutio

133、ns for our actions to address animal welfare and support plant-based transition.20 In addition,Alison George,our Head of Impact&Ethics,was recognised in financial services industry publication FS Sustainabilitys 2024 ESG Power50 Guide.The Australian Ethical FoundationThe Australian Ethical Foundatio

134、n continues its important work supporting innovative and effective charities combatting climate change.The record$1.8 million donated by AEI to The Foundation in FY24 brings the cumulative total donated to not-for-profits to just over$11 million21.Utilising new and retained funding from previous yea

135、rs,The Foundation continued its support of not-for-profit organisations in FY24.This was delivered through its multi-year Strategic Grants,and its Visionary Grants program which funds projects trialling new approaches to solving climate change.The quality of the grant applications we receive continu

136、es to rise,with successful projects representing all our focus areas,from grassroots community projects,all the way to system level interventions.A new three-year strategy was also approved by The Foundations Board in FY24.Our focus will continue to be on climate and nature-related activities,with a

137、n emphasis on alignment with our ethical stewardship program across Australian Ethical and partnering with other philanthropic organisations to maximise impact.16 Commitments to change are commitments made by the engaged entity after our engagement commenced,that reflect progress towards the ultimat

138、e objectives of the engagement beyond acknowledgment of an issue.For examples of commitments and information on how they are identified,see the Stewardship Reports available on our website.17 Investments exited during the year due to ethical re-assessment.Not including companies excluded from initia

139、l investment.18 .au/shareholder/corporate-governance/19 Page 920 Rank 3;scoring 34 out of 42 in an assessment of 80 financial institutions globally on their actions to address animal welfare and support plant-based transition:banksforanimals.org/21 The amount cumulatively allocated to not-for-profit

140、s(NFP)by AEI,which includes grants made to NFPs made by AEI prior to the Foundations inception22 Theory of Change at:.au/why-ae/influence/14 We count one engagement where we engaged with a company on a topic or series of topics.There may be multiple activities within that engagement.For example,our

141、engagement with Westpac is counted as one engagement which included meetings,emails and co-filing a shareholder resolution.We may count two engagements with a company if there were separate activities on entirely separate topics.15 Our proactive engagement count includes where we engaged directly wi

142、th a company,government or other entity;we actively contributed to collective engagements(as distinct from simply signing on);we used a nominal advocacy holding to support shareholder resolutions;or we co-filed a resolution.Commitments to change are commitments made by the engaged entity after our e

143、ngagement commenced,that reflect progress towards the ultimate objectives of the engagement beyond acknowledgment of an issue.They may be identified through e.g.direct company responses,company reporting or actions taken,changes to government policies or draft legislation,or actions taken by industr

144、y associations.For examples of commitments,see our Stewardship Report:.au/why-ae/ethical-stewardship/Compelling client experienceSince insourcing the customer servicing functions for our super members in 2021,we have been working hard to create a best practice,inhouse servicing model.Together with a

145、 new telephony system,we have built a strong operating model,rhythm and cadence to support our high performing team.We introduced the CARE(Collect,Analyse,Resolve,Empower)framework to ensure feedback is actioned at scale to make our customers feel heard and valued.While enhancing operations,we have

146、also improved the ease of doing business with us.Despite record levels of interaction,our post-call customer satisfaction scores are consistently in the 90%range,with verbatim comments reflecting these results.We are incredibly proud of the results we have achieved.We were the Retail Superannuation

147、Fund of the Year in the Roy Morgan 2023 Customer Satisfaction Awards and in the Top 3 Most Trusted Super Brands according to Roy Morgan22,we won the Best Inclusive Customer Experience at the CX Awards and were finalists in three categories of the Customer Service Institute of Australia Awards.Buildi

148、ng the brand to support growthHaving a strong,differentiated,and distinct brand is critical to customer growth in both our direct and B2B channels,and as such we continued to invest in building brand awareness and consideration in FY24.We launched a new brand campaign When you prosper,we all thrive

149、at the end of January 2024.The campaign has been designed to communicate the core tenet of our investment principles that Australian Ethical strives to both deliver positive returns and to make a difference in the broader community.It continues to be highly visible to our target market into FY25.ANN

150、UAL REPORT 20243435Australian Ethical Investment Limited and its Controlled Entities Directors Reportfor the year ended 30 June 2024YouGovs BrandIndex from April 2024 reveals that while the campaign has increased brand awareness,we continue to have low awareness compared to the large super funds.How

151、ever,the same research shows that those who are aware of the brand have significantly higher levels of brand consideration and purchase intent than other super funds are demonstrating.In recognition of the vital connection between brand and business growth,brand strategist Emma Grainge was appointed

152、 in February 2024 as the new Head of Brand and Communication.In addition to advertising,Emma is tasked with building Australian Ethicals brand and reputation for responsible investment leadership across content,social media and brand partnerships.The FY24 market environment was dominated by cost-of-

153、living pressures,market volatility and a greenwashing backlash.These factors contributed to a level of consumer inertia that impacted switching and fund flows in super and managed funds.Nevertheless,Australian Ethical continues to win new super members and achieve positive net flows.Super is an impo

154、rtant source of growth for our retail business,with mandated SG contributions providing an ongoing,annuity-style revenue stream.Our purpose-led business is attractive to all demographics,but particularly to younger customers,who may have low balances at the time they join but represent decades of lo

155、yalty to come.Indeed,our super retention figures are some of the best in the industry23.Impactful business While$10 billion in FUM and$100 million in revenue were significant milestones achieved in FY24,we are just starting to deliver our ambitious growth strategy.We have built an inhouse merger and

156、 acquisition discipline and are pleased by the speed,integration results and overall success of our recent SFT.This capability will help to facilitate the effective execution on the recently announced acquisition of the Altius Asset Management business as well as future opportunities.23 2024 KPMG Su

157、per Insights Report and dashboard(Data source:APRA Annual fund level superannuation statistics back series:June 2004 to June 2023(issued 13 December 2023)24 Over the contract period and subject to customer and FUM levels.To commence on the delivery of the super administration transition and the cust

158、ody and investment administration transitionWe were delighted to win the Financial Services Growth Company of the Year Award,2023 in the Australian Growth Company Awards.This award program recognises exceptional growth companies across Australia.An independent panel of judges determined the winners

159、from a list of finalists demonstrating the highest rates of sustainable growth,innovation,integrity,and contribution to the community.We continue the work to build a scalable,flexible and professional platform to support the organic or inorganic growth to come.We have made good progress on our trans

160、formational programs,the consolidation to a single super administrator (GROW Inc)and the move to a new custodian.These two projects due to complete in FY25 will further enhance our readiness for future growth,while reducing unit costs over time and delivering a roadmap of enhanced member services.On

161、ce the super administration transition project is complete,it is expected to deliver a staged customer experience uplift and a new modern technology stack.Upon completion in late FY25,due to a more favourable pricing agreement,the transition to GROW is expected to deliver annualised unit cost saving

162、s of approximately$3 million,with the custody transition expected to deliver operating cost savings of approximately$1 million per year post completion24.We will also continue to invest in further customer experience enhancements.To facilitate integration of these projects,in early FY24 we reviewed

163、our end-to-end investment processes and have developed a future state target operating model which we are now working towards implementing.The new model includes enhanced front office systems for portfolio management and trading,performance and risk,a new investment book of record(IBOR),and a new in

164、vestments data platform and reporting capabilities.To facilitate the new model,we established a revised support organisational structure with clearer functional accountabilities,segregation of duties,and streamlining of processes to provide enhanced risk management and efficiencies.25 Culture Amp Em

165、ployee engagement survey June 202426 The full public data report which includes information on our organisations policies,strategies,and actions on gender equality and workforce statistics is available on our website:.au/shareholder/corporate-governance/Leadership,culture&innovationIn FY24 we contin

166、ued to invest in our people,the lifeblood of our purpose-driven and high performing culture.We maintained our focus on the important capability build-out in key areas such as our Data and Technology team,Product team,Brand team,Investment,and Impact&Ethics teams.To support this uplift,we implemented

167、 several development programs focused on industry knowledge,continuous improvement,and empowering efficient and effective decision-making.During the financial year,26%of employees participated in the CFA Institute Investment Foundations Certificate program which provides learners with an understandi

168、ng of the global investment industry including terminology and foundational concepts.We also developed a 12-month training program with Generation E,to advance our employees knowledge of Microsoft 365 tools and applications to better enable their performance and personal development,and improve the

169、employee experience with consistent usage,streamlining processes and information flow.To ensure we can continue to grow sustainably through more scalable,efficient,and automated processes while improving the employee experience our third“AEx week”held in March 2024 had a similar theme.Inspired by th

170、e book Essentialism,the disciplined pursuit of less by Greg McKeown,sessions explored how focusing on the essential aspects of decision-making and eliminating non-essentials can lead to greater impact and increased fulfilment both personally and professionally.In FY24 we implemented an improved busi

171、ness planning and goal setting methodology and framework OKRs(Objectives and Key Results).The fundamental purpose of OKRs is to provide a collaborative process for leaders to set strategic direction,with clear measures of success,so that all team members have a shared understanding and common purpos

172、e and context to determine what work they will prioritise.This approach has improved individual and organisational performance.Diversity,Equity&InclusionWe are committed to fostering an inclusive and equitable environment so our diverse talent can bring their authentic selves to work and be at their

173、 best.We believe in the inherent strength this creates,which inevitably leads to better outcomes for our people,customers,shareholders,and the wider community.Indeed,a resounding 88%of participants in our 2024 employee engagement survey25 affirmed Australian Ethical builds teams that are diverse and

174、 that We have initiatives that inspire a positive and inclusive environment.Weve held targets for achieving gender diversity at board and senior management level,the investment team and across the workforce for a number of years.And we have been tracking well against these targets.In FY24,we set a n

175、ew stretch target to have women represent 40%of our investment team(30%previously);by the end of FY24 we had achieved 36%female representation.This year we submitted our first Workplace Gender Equality Agency(WGEA)report.This documents the gender pay gaps for private sector employers with 100 or mor

176、e employees.It was pleasing to see that the policies and practices we have in place are delivering results,noting there is more to do.AEs Total Remuneration average gender pay gap is 12.1%and Total Remuneration median gender pay gap is 9.4%,well below the national statistics of 21.7%and 19%,respecti

177、vely26.Inclusive benefitsThis year we updated our Parental leave policy and launched our gender-neutral 20-weeks paid parental leave,which can be taken flexibly,to support employees to care for their newborn child or for a child placed with them for adoption,fostering or via a surrogacy arrangement.

178、We believe the enhancements are transformative and inclusive for men,women,and LGBTQIA+people and better reflects the reality of work and care arrangements for many working families today.Since implementing the proportion of males accessing parental leave has increased.ANNUAL REPORT 20243637Australi

179、an Ethical Investment Limited and its Controlled Entities Directors Reportfor the year ended 30 June 2024Employee engagement We are very proud of our high-performing,purpose-led culture and were therefore pleased to see our employee engagement score lift from 70%in the prior period to 79%in June 202

180、4.This is a top quartile result according to Culture Amps Financial Services Australia index27.The word is getting out.This year our approach,and a number of our people,were recognised by a range of awards and accolades.In the Financial Newswire Women in Wealth Awards 2024 we were finalists in the c

181、ategories of Employer of the Year;Investment Professional of the Year(Deana Mitchell,Portfolio Manager);Superannuation Professional of the Year(Mei-Ling Cheong-Nepia,Head of Service&Ops).We were winners of the CX Awards Best Inclusive Customer Experience(client services team);winners of the Customer

182、 Service Institute of Australias Customer Service Champion Award(Nyssa Lobo Bismire,Client Services Manager)and finalists in the categories of Customer Service Professional of the Year(Avir Alagh)and Customer Service Advocate of the Year(Caroline Maillols).Maria Loyez,Chief Customer Officer was Awar

183、ded a Fellowship from The Marketing Academy Asia Pacific,a prestigious global program available to only 20 high achieving marketing leaders each year.ReconciliationWe have advocated for and supported the achievements of the Aboriginal and Torres Strait Islander peoples for many years.We recognise re

184、conciliation will provide a better future where both people and planet prosper.Our established Reconciliation Action Plan(RAP)working group has representatives from across the organisation who design and implement initiatives to promote reconciliation within Australian Ethical and encourage,educate,

185、and promote involvement from the wider business.In 2023 we developed a Reflect RAP to capture the work we are already doing,along with our focus areas moving forward.Our Reflect RAP was recently endorsed by Reconciliation Australia.27 This ranks as top quartile for Financial Services Australia(top q

186、uartile is 78%and above) In September 2023 we reduced the Management Fee for the Australian Ethical High Conviction Fund from 0.80%p.a.to 0.69%p.a.Profit Underlying profit after tax(UPAT)was$18.5 million,up 57%compared to the prior corresponding period.UPAT excludes integration and transition costs,

187、due diligence and transaction costs and the Sentient investment fair value write-down(see below).The net profit attributable to shareholders was$11.8 million,up 80%compared to the$6.6 million for the 12 months to 30 June 2023.The net profit for the Group amounted to$11.5 million,which includes conso

188、lidating the Foundations activities.As we continue to execute on our growth strategy,FY24 has seen continued prudent investment in initiatives to build a strong business platform and growth engine.RevenueOperating revenue reached the$100 million milestone for the period,increasing 24%to$100.5 millio

189、n.The increase was achieved through further growth in our customer numbers(with resulting positive net flows),the full year positive impact of the Christian Super SFT undertaken in the prior year,and positive investment returns.Our Emerging Companies Fund outperformed its benchmark,resulting in a pe

190、rformance fee of$0.2 million for FY24.Average FUM growth for FY24 was 25%.The average revenue margin across all products decreased from 1.03%in FY23 to 1.02%in FY24 reflecting the full year impact of fee reductions at the time of the Christian Super SFT and the management fee reduction on the Austra

191、lian Ethical High Conviction Fund28.Expenses As we continue to grow our business both organically and inorganically,we are seeing further improvements in operating leverage,with FY24 underlying cost to income ratio(CTI)of 74%compared to 79%in FY2329.Expenses increased by 16%.This excludes integratio

192、n and transformation costs,due diligence&transaction costs and the Sentient investment fair value write-down(described below).As a result of Sentient Impact Group Pty Ltds(Sentient)inability to drive the scale required to achieve its strategy and business plan aspirations,the Sentient Board decided

193、to commence an orderly sale of its assets.Consequently,the final capital call on Australian Ethical of$0.4 million was no longer required or payable.After this amount of$0.4 million,Australian Ethical has prudently recorded a fair value write-down of$2.2m in FY24,effectively valuing any further resi

194、dual liquidation value at zero.Key drivers of our cost base increase in FY24 were:Employee expensesEmployee expenses increased 24%following several hires and talent acquisition as part of the growth strategy as we continue to build capability in the investment and ethics,and data and technology team

195、s.In addition,back-office teams have been enhanced to build out our mergers and acquisition capacity and strengthen our risk and governance function.Further,the run rate of FY23 hires as well as remuneration increases contributed to the increase.FTE increased from 118 on 30 June 2023 to 12530 on 30

196、June 2024.Fund related expensesFund related expenses increased by 26%,representing a third of the 16%growth in overall expenses.This was driven by higher average funded customer numbers and FUM following the full year impact of the Christian Super SFT.Inflation and higher regulatory fees following A

197、PRA and ASICs levy rate increases contributed to the expense uplift.These increases were partially offset by savings achieved through reaching scale thresholds.MarketingMarketing costs have decreased 22%year on year due to the rationalisation of the Employment Platforms channel,with a tilt in focus

198、towards our more profitable direct and advised channels.Continued spend on brand advertising remains an important component of driving our brand awareness and growth,however timing of brand campaigns resulted in lower brand spend in FY24 compared to prior year.It is worth noting that our overall mar

199、keting and brand costs remain significantly lower than many other super fund competitors31.IT expensesIT expenses increased 21%,driven by the commencement of the IT strategy to build a stronger core in-house technology capability able to support the required agility and future scaling of the busines

200、s.This will enable a data driven,digitalised business with improved automation and innovation.Further,we continue to improve our cybersecurity defences with further investment in FY24.External servicesExternal services costs increased 15%,as due to higher recruitment costs and higher internal and ex

201、ternal audit and tax services expenses.29 Underlying cost to income ratio is calculated as:total expenses excluding UPAT adjusted expenses and excluding tax,divided by total revenue30 Excludes FTE assigned to projects whose costs are not captured in employee expenses31 In absolute terms as per APRA

202、Annual Fund Level Superannuation Statistics.Data as at 30 June 2023,published on 13 December 2023.ANNUAL REPORT 20243839Australian Ethical Investment Limited and its Controlled Entities Directors Reportfor the year ended 30 June 2024Funds under management We ended FY24 with$10.44 billion in FUM,surp

203、assing the$10 billion milestone we achieved in March.Investment performance represented$626 million of this growth,while positive net flows of$607 million($602 million of this provided by super)made up the balance.In the period,we saw member growth driving new rollovers in,while superannuation guara

204、ntee(SG)and voluntary contributions continued to rise on the back of the organic and inorganic growth of our member base.While super net flows remained strong,managed funds flows were impacted by cautious market sentiment relating to the market volatility and were just$6 million for the year.Our wel

205、l diversified product set has ensured we remain resilient during the challenging market conditions and continue to grow total FUM.Material business risks Australian Ethicals approach to risk management is based on the Risk Appetite Statement set by the Board,which sets out the overall appetite and t

206、olerance levels and defines limits for each material risk category.The Board holds the ultimate responsibility for setting strategic direction,the risk management framework(RMF)and determining the risk appetite/tolerance for the activities of the business.The board forms a view of the risk culture o

207、f the Group and any desirable changes required and monitors implementation of these changes.The Board recognises that risk management is an integral part of good management practice and is integrated into the Australian Ethical philosophy,practices,and business planning processes.A risk aware cultur

208、e and operation within the Boards risk appetite and tolerances is promoted throughout the organisation through regular communications from management and within the provision of training and ongoing support from the Risk team.The Audit Risk and Compliance Committee(ARCC)oversees and reviews the RMF,

209、and reviews internal and external audit results.This oversight includes the identification,treatment,and monitoring of:The use of risk appetite Current and emerging material risks,including (but not limited to)investment,data,technology,and cyber risks Exceptions,incidents,and breaches Complaints Th

210、e results of control testingThe full ARCC charter(and other board charters)can be found on the Australian Ethical website at:.au/shareholder/corporate-governance/The RMF is supported by the Three Lines of Defence model with the first line being Senior Leadership Team(SLT)who foster and enhance devel

211、opment of risk culture within the Group,monitor risks,report breaches and review risk register.The SLT have day to day responsibility and accountability for risk management in their area and ensure an appropriate risk culture.Australian Ethicals second line,the Risk team,facilitates the RMF,includin

212、g review and update of the risk register and RMF,reports on exceptions and control effectiveness.The third line of defence is Internal Audit,(which is outsourced to PricewaterhouseCoopers in accordance with ARCC approved annual audit program)who provides assurance over the RMF and independent review

213、 of the design and operation of the control environment,as well as External Audit(KPMG)who provides assurance,through the annual audits and reviews as required by SPS 310 and the Corps Act,that internal controls are designed appropriately and operating effectively.Risk categoryRisk description/impac

214、tRisk mitigantsRisk ManagementRisk that AE breaches its corporate,fund and superannuation regulatory and legal obligations or industry standards(including licence conditions,governing documents).Risk that AEs insurance policies are not appropriate to cover business risk levels.Dedicated Risk and Leg

215、al Team.Internal&external reviews of public documents.Mandatory compliance training for all staff based on internal policies and procedures.Embedded controls assurance framework,including requirement for independent assurance.Compliance obligations are documented and monitored.Breach reporting escal

216、ation processes.Annual review of insurance program.FinancialRisk that AEs profitability,capital reserves or liquidity are inadequate to support ongoing business activities.This includes inappropriate accounting,financial reporting and related disclosures(for both the funds and corporate entities),as

217、 well as incorrect calculation and payment of tax,and poor financial control and operational processes.Risk arising from low net flows or poor investment performance as a result of exposure to equity markets resulting in potentially volatile earnings(revenue linked to FUM),and poor customer outcomes

218、.Risks arising from calculation of incorrect unit prices.Appropriate financial control processes,including monitored cashflows and cash position,annual budgeting and regular forecasting.Regular reconciliation and review processes for financials,units on issue and applications/redemptions.Regular mon

219、itoring of regulatory capital requirements.Appropriate policies and procedures,quality control,management approval frameworks across financial process,asset valuations,distributions,fees and expenses and approval of unit prices.Internal and external audit,professional reviews of finance and unit pri

220、cing controls.Agile management of resource allocation,prudent cost control.Regular monitoring of key financial metrics.Monitoring of external market drivers e.g.interest rates,inflation,and refinement of business activities in response.Confirmation and recording of asset valuations including Valuati

221、on Committee for unlisted assets.Unit Pricing oversight model including Unit Price Committee.ANNUAL REPORT 20244041Australian Ethical Investment Limited and its Controlled Entities Directors Reportfor the year ended 30 June 2024Climate changeClimate change is a systemic risk to our business,investme

222、nts,and the financial system as a whole.High emitters in particular face regulatory,legal and reputational risks,as do their value chains,including those who finance their activities.This risk can manifest as increased costs,changes in demand,and declines in asset values,including asset stranding.Cl

223、imatic changes,both chronic and acute,can affect costs,revenues,and asset values,and will continue to escalate unless effective policy and technological responses are implemented to prevent dangerous climate change.Our response to climate change is considered by our board in reviewing and approving

224、our corporate strategy and,via our investment committee,where climate change related topics are regular agenda items.The board includes members with climate change expertise.Our investment beliefs recognise the criticality of preventing dangerous climate change to both our ethical and financial goal

225、s.Our ethical assessment and investments processes consider climate change.We restrict32 investments in companies assessed to be obstructing the objectives of the Paris Agreement to limit global warming to well below 2C and to pursue a limit of 1.5C.Our Chief Investment Officer and Head of Impact&Et

226、hics are responsible for implementation of our ethical investment approach,including our climate-related ethical assessment criteria.Our strategic and active asset allocation processes consider climate risks.Our Impact&Ethics Team monitors existing and emerging climate-related risks,using diverse co

227、mpany,industry,government,responsible investment,scientific,civil society and news sources.We have established metrics to monitor the effectiveness of our ethical investment approach in managing climate risk and report on these in our full Annual Report published on 11 October 2024.Environmental,Soc

228、ial and Governance(ESG)Risk arising from inadequate or inappropriate Ethical and Environmental,Social and Governance(ESG)considerations in business and investment decision-making.Risk may arise due to unclear employee accountabilities,inadequate board reporting,inadequate identification and manageme

229、nt of conflicts,non-compliance with Ethical Charter.Our Ethical Charter forms part of Australian Ethicals constitution and informs all aspects of company operations.Robust ethical assessment and investment processes-all investments are evaluated against the positive and negative principles in our Et

230、hical Charter.Embedded governance framework including board and committee charters,board and committee reporting.Board oversight responsibilities are underpinned by the Ethical Charter,which is embedded in Board Charter.B Corp certification status maintained.Risk categoryRisk description/impactRisk

231、mitigantsInvestmentðical evaluationRisk arising from inappropriate investment strategies,non-adherence to investment governance,non-adherence to fund governing documents,non-adherence to ethical criteria or inadequate management of market,credit and liquidity risks within the funds.Risk arising f

232、rom underperformance of Managed Funds and Super Options relative to stated investment objectives.Regular ethical reviews of investments to ensure they remain in line with our Ethical Charter.Established investment governance frameworks in place.Investment performance analytics.Stress testing.Reviews

233、,reconciliations and monitoring of key metrics.Investment Committee(IC)in place with independent members appointed.Quarterly review of performance(including attribution)by Investment Committee.Annual review and approval of Strategic Asset Allocations.IC approved Trust Investment Parameters.CustomerR

234、isk arising from inaccurate,misleading or inadequate PR,marketing,brand,sustainability reporting or advocacy activities leading to reputational damage,regulatory penalties and negative stakeholder sentiment.Risk arising from inadequate processes,systems,outsourced suppliers,quality standards,product

235、 offering resulting in poor customer experience,reputational damage and financial impacts.Regular monitoring of brand awareness.Media monitoring and Media Policy.Review processes over marketing material.Mature ethical stewardship activities embedded.Monitoring of key metrics relating to customer sat

236、isfaction(CSAT).Complaints handling processes.Product guidelines,frameworks and policies.StrategicRisk arising from poor strategic decisions,inadequate development and execution of strategic initiatives,a lack of responsiveness to regulatory change or external market and economic trends that could a

237、ffect our offering or market position.Robust and embedded strategy and business planning processes that includes regular review and monitoring of external market trends and metrics.Dedicated Project Management Office(PMO)and program management framework for effective execution of strategic and regul

238、atory initiatives.Senior Leadership variable remuneration linked to strategic metrics.Regular monitoring of progress against strategy through Objective and Key Results(OKR)framework,reporting to Senior Leadership Team and Board,incorporating agile reprioritisation of initiatives.Risk categoryRisk de

239、scription/impactRisk mitigants32 Our investment restrictions include some thresholds.Thresholds may be in the form of an amount of revenue that a business derives from a particular activity,but there are other tolerance thresholds we can use depending on the nature of the investment.We apply a range

240、 of qualitative and quantitative analysis to the way we apply thresholds.For example,we may make an investment where we assess that the positive aspects of the investment outweigh its negative aspects.For information on how we make these assessments for a range of investment sectors and issues such

241、as fossil fuels,nuclear power,gambling,tobacco,human rights,and many others,please read our Ethical Criteria at:.au/globalassets/pdf-files/why-ae/ae-guide-to-our-ethical-investment-process.pdf.ANNUAL REPORT 20244243Australian Ethical Investment Limited and its Controlled Entities Directors Reportfor

242、 the year ended 30 June 2024Operations(including Outsourcing Risk)Risk arising from inadequate processes,systems,quality standards,data management or from external events.This includes(but is not limited to)processing errors,human error,fraud,unauthorised advice or an event which disrupts business c

243、ontinuity.Risk that AE enters into untenable contracts and servicing agreements with vendors and suppliers or selects an unsuitable vendor or supplier.Risk that services provided by external service providers are not managed in line with contractual obligations and service level agreements.Embedded

244、policies,methodologies,procedures,roles and responsibilities(including segregation of duties where needed).Board subcommittees e.g.,Due Diligence Committee.Internal Fraud Design Taskforce.Controls assurance framework.Effective incident and issues management processes.Business continuity planning and

245、 disaster recovery programs(including by outsourced providers).Comprehensive insurance program.Robust documented processes for new product delivery and product management(including regulatory compliance).New vendor due diligence processes.Monitoring of key metrics,contractual arrangements and servic

246、e delivery.IT&CybersecurityRisk arising from inadequate,failed,breached or corrupted IT systems resulting from poor infrastructure,data management,applications,cloud services,business continuity plans,security controls,IT support or unauthorised access.Includes(but is not limited to)confidentiality

247、or privacy breaches,loss of data integrity,loss of sensitive or critical data as well as business disruption or financial loss resulting from a cyber security event,disaster or failure of technology service provider to meet business needs.Embedded IT security policies and procedures including mandat

248、ory IT policy and phishing training.Operational technology security in place(including firewalls and antivirus).IT system penetration testing;Password integrity testing.Regular board oversight over cyber security risks.The Board and/or ARCC reporting receives reports on cyber risk,threats,uplift pro

249、grams,cyber incidents(if any),and information security testing results that identify material information security control deficiencies requiring remediation(if any).Business continuity planning and disaster recovery programs including testing(including service providers),incident response plans.AEI

250、 Board monitors IT Disaster Recovery Plans and Business Continuity Plans and annual testing.Independent assurance.Risk categoryRisk description/impactRisk mitigantsPeopleRisk arising from an inability to hire,engage,develop,empower and retain quality and appropriate capability(including Senior Leade

251、rship and Board)to meet performance objectives and execute AEs business strategy.Risk arising from inadequate work health and safety(WH&S)practices.Risk arising from unethical conduct by directors or employees,or from behaviours that are not aligned with AEs values,culture and expectations.Embedded

252、People policies and procedures(including WH&S policies,procedures and training).Succession planning,talent identification programs,retention and hiring strategies,embedded performance review processes,remuneration benchmarking and reporting to the People,Remuneration and Nominations Committee.Remune

253、ration framework to ensure senior management alignment to medium-and longer-term strategic goals.Investment team remuneration structure aligned to performance objectives.Regular employee engagement and turnover monitoring;dedicated employee engagement business representatives.Employee assistance pro

254、gram.Inclusion of risk metrics and thresholds as well as values alignment assessment in performance management framework.Risk categoryRisk description/impactRisk mitigantsANNUAL REPORT 20244445Australian Ethical Investment Limited and its Controlled Entities Directors Reportfor the year ended 30 Jun

255、e 202433 Over the contract period and subject to customer and FUM levels.Savings to commence on the delivery of phase 1 of the super administration transition and the custody and investment administration transition.34 Relates to the increased revenue from the Altius take-on FUM,less the additional

256、expenses relating to Altius Fixed Income team,registry,custody and front office system license costsOutlookThe medium-term market opportunity remains compelling,and we head into FY25 with good momentum.The expected completion of the Altius acquisition in September 2024 as well as continued organic g

257、rowth,and the increase of the superannuation guarantee rate,is expected to underpin further FUM growth in FY25.In FY25 our investment focus will be the delivery of key inflight projects,including the transition of our super administration to GROW,as well as the transition of our custody and investme

258、nt administration to State Street as our current custodian exits the market.Whilst we continue to invest in our business platform,the completion of these projects is expected to deliver annualised unit-cost savings of approximately$4 million to recurring operating expenses33.Our Data and Technology

259、strategy implementation will continue,with further enhancements delivered to our technology infrastructure to enhance internal efficiencies and access to data and business intelligence in support of business growth.Further investment in cybersecurity will continue to manage this risk in the rapidly

260、evolving external environment.We will continue to hone the capability of our investment team to build on our ethical investing competitive advantage and complete the enhancement of our investment management platform.This will bolster operational,product development and trading capabilities and syste

261、ms,to support a business of much larger scale.We believe this will translate to an enhanced investment capability across all asset classes,strong investment performance outcomes,as well as increased innovation through new investment products and business initiatives.Furthermore,the acquisition of Al

262、tius is expected to generate approximately$1 million in annualised EBITDA uplift34.Notwithstanding the continued investment in our business,we remain focused on delivering operating leverage as we scale,whilst remaining cognisant of uncertain market conditions.As a business,we look forward to the op

263、portunities that lie ahead.We continue to be well-positioned with no debt,well-managed cash flows and solid momentum heading into FY25.Financial Performance management analysisFinancial Performance management analysis2024$0002023$000%Increase(Decrease)Net Profit after tax(NPAT)including performance

264、fee11,5316,57675%Add:Net loss attributable to The Foundation*316Net profit after tax attributable to shareholders11,8476,57680%Adjustments:Change in fair value of investment 2,1592,600Integration&transformation costs(refer to Note 13)5,0683,733Due diligence&transaction costs(refer to Note 14)1,379Ta

265、x on adjustments(1,934)(1,120)Underlying profit after tax(UPAT)including performance fee18,51911,78957%Performance fee(net of bonus,tax and Foundation grant)78Underlying profit after tax(UPAT)excluding performance fee18,44111,78956%Diluted EPS on NPAT attributable to shareholders(cents per share)10.

266、515.84Diluted EPS on UPAT attributable to shareholders(cents per share)16.4410.46*refer to Note 37 for additional details in relation to The Foundations financial results.Operating leverage2024$0002023$000Total expenses per statement of comprehensive income80,79867,914Less:Integration&transformation

267、(5,068)(3,733)Due diligence&transaction(1,379)Total underlying operating expenses74,35164,181Divided by:Total operating revenue100,49181,096Underlying cost to income ratio74%79%DividendsDividends paid during the financial year were as follows:2024$0002023$000Final dividend for the year ended 30 June

268、 2023 of 5.00 cents (2022:3.00 cents)per ordinary share fully franked5,6393,372Interim dividend for the year ended 30 June 2024 of 3.00 cents (2023:2.00 cents)per ordinary share fully franked3,3832,2569,0225,628Since year end the Directors have declared a final dividend of 6.00 cents per fully paid

269、ordinary share(2023:5.00 cents final dividend).The aggregate amount of the declared dividend expected to be paid on 18 September 2024 out of profits for the year ended 30 June 2024,but not recognised as a liability at year end,is$6,767,000(2023:$5,639,000).All dividends paid during the year were ful

270、ly franked based on tax paid at 30.0%.The final dividend to be paid in September 2024 will be fully franked at 30.0%.ANNUAL REPORT 20244647Australian Ethical Investment Limited and its Controlled Entities Directors Reportfor the year ended 30 June 2024Changes to contributed equity during the year an

271、d prior to the issue of the reportDuring the year and prior to the release of this report the following changes to contributed equity occurred:DetailsDateSharesWeighted Average issue price$000Balance1 July 2023112,782,052 10,515Vesting of deferred shares in the Employee Share Plan(255,234 shares)15

272、September 2023$4.531,156Vesting of deferred STI shares(108,628 shares)15 September 2023$6.10663Vesting of deferred shares in the Employee Share Plan(8,528 shares)10 November 2023$5.2945Purchase of deferred shares in the Employee Share Plan on-market(568,032)23 October to 12 December 2023$4.53(2,571)

273、Purchase of deferred shares in the Employee Share Plan on-market(18,261)22 December 2023$5.27(96)Vesting of deferred shares in the Employee Share Plan(2,271 shares)1 February 2024$7.3716Vesting of deferred shares in the Employee Share Plan(7,013 shares)1 March 2024$5.6840Vesting of deferred shares i

274、n the Employee Share Plan(72,121 shares)6 March 2024$6.49468Balance30 June 2024 112,782,052 10,236No amounts are unpaid on any of the shares.Refer to Note 25 for additional information and a detailed breakdown of the shares vested during the year.Significant changes in the state of affairsIn May 24,

275、Australian Ethical signed an agreement to acquire the Altius Asset Management business from Australian Unity.This will result in six new employees in the fixed income team,an expanded bond fund portfolio and a new institutional client(Australian Unity).When completed in early FY25,the deal will add

276、approximately$2 billion to Australian Ethicals funds under management.There were no other significant changes in the state of affairs of the Group during the financial year.Matters subsequent to the end of the financial yearApart from the dividend declared in Note 27,no other matter or circumstance

277、has arisen since 30 June 2024 that has significantly affected,or may significantly affect the Groups operations,the results of those operations,or the Groups state of affairs in future financial years.Likely developments and expected results of operationsInformation about likely developments in the

278、operations of the Group and the expected results of those operations in future financial years has not been included in this report because disclosure of the information would be likely to result in unreasonable prejudice to the Group.Environmental regulationTo the best of the directors knowledge,th

279、e relevant environmental regulations under Commonwealth and State legislation have been complied with.Meetings of DirectorsThe number of meetings of the Companys Board of Directors(the Board)held during the year ended 30 June 2024,and the number of meetings attended by each Director were:Full BoardP

280、eople,Remuneration and Nominations CommitteeAudit,Compliance and Risk CommitteeEligibleAttendedEligibleAttendedEligibleAttendedSteve Gibbs11117766Kate Greenhill10107766Mara Bun11117766Julie Orr11117766John McMurdo1111 Sandra McCullough111177Due Diligence CommitteeInvestment CommitteeEligibleAttended

281、EligibleAttendedSteve Gibbs88Kate Greenhill88Mara Bun88Julie Orr87Sean Henaghan88Steve Rankine87Sandra McCullough88Michael Anderson86Ludovic Theau88Indemnity and insurance of officersThe Company has indemnified the Directors and Executives of the Company for costs incurred,in their capacity as a Dir

282、ector or Executive,for which they may be held personally liable,except where there is a lack of good faith.During the financial year,the Company paid a premium in respect of a contract to insure the Directors and executives of the Company against a liability to the extent permitted by the Corporatio

283、ns Act 2001.The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.Indemnity and insurance of auditorThe Company has not,during or since the end of the financial year,indemnified or agreed to indemnify the auditor of the Company or any related ent

284、ity against a liability incurred by the auditor.During the financial year,the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity.Proceedings on behalf of the CompanyNo person has applied to the Court under section 237 of the Corporation

285、s Act 2001 for leave to bring proceedings on behalf of the Company,or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.ANNUAL REPORT 20244849Australian Ethical Investment Limited and

286、 its Controlled Entities Directors Reportfor the year ended 30 June 2024Non-audit servicesDetails of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in Note 31 to the financial statements.The Directors are satisfied tha

287、t the provision of non-audit services during the financial year,by the auditor(or by another person or firm on the auditors behalf),is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.The Directors are of the opinion that the services as disclose

288、d in Note 31 to the financial statements do not compromise the external auditors independence requirements of the Corporations Act 2001 for the following reasons:all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor;and

289、none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board,including reviewing or auditing the auditors own work,acting in a management or

290、decision-making capacity for the Company,acting as advocate for the Company or jointly sharing economic risks and rewards.Officers of the Company who are former partners of KPMGThere are no officers of the Company who are former partners of KPMG.Rounding of amountsThe Company is of a kind referred t

291、o in Corporations Instrument 2016/191,issued by the Australian Securities and Investments Commission,relating to rounding-off.Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars,or in certain cases,the nearest dollar.Auditors i

292、ndependence declarationA copy of the auditors independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this Directors report.AuditorKPMG continues in office in accordance with section 327 of the Corporations Act 2001.This report is made in acc

293、ordance with a resolution of Directors,pursuant to section 298(2)(a)of the Corporations Act 2001.On behalf of the Directors JOHN MCMURDO Managing Director and Chief Executive Officer28 August 2024 Sydney5051ANNUAL REPORT 2024Remuneration ReportAustralian Ethicals history.Our results have been booste

294、d by the first full-year benefit of the successful Christian Super successor fund transfer,which has contributed to the very strong 57%uplift in underlying profit after tax.We have also continued to grow organically despite challenging markets.In FY24 we achieved positive net flows of$607 million at

295、 a time many of our competitors are in net outflow position.Together with$626 million of positive investment return our funds under management grew 13%to a new record high of$10.44 billion.With our greater scale,we are now delivering higher profits,higher dividends and also delivering meaningful imp

296、rovements to our operating leverage,with our underlying cost to income ratio1 further improving in FY24 to 74%.All of this has enabled a five-year total shareholder return(TSR)of 160%compelling evidence of our long-term value creation for shareholders.Whilst we are very pleased with our financial me

297、trics for the period,we are also delighted that our strategy is delivering positive outcomes across many other areas of our business,including:our enviable customer retention and customer satisfaction,recognised through multiple awards,our strong brand trust and recognition,being named Roy Morgan to

298、p 3 most trusted super brands,2 continued recognition for our responsible For the year ended 30 June 2024Dear Shareholder,On behalf of the Board,I am pleased to present our Remuneration Report for the financial year ended 30 June 2024(FY24).The remuneration report provides our shareholders and stake

299、holders with a thorough and transparent outline of our remuneration framework and the philosophies behind the remuneration arrangements and other employee benefits.It specifically focuses on the remuneration outcomes of Non-Executive Directors,the Chief Executive Officer(CEO)and senior executives,co

300、llectively referred to as Key Management Personnel(KMP),and how they align with our performance and strategic goals for the current and future years.A transformational yearWhile FY24 has been a challenging year for markets and investment performance,in many respects,it has represented a coming of ag

301、e for Australian Ethical.In 2021 we outlined our strategy to capture the significant opportunity represented by the macro trend towards responsible investing and have been investing prudently to build a scalable business platform and grow the business both organically and inorganically.In FY24,as we

302、 reflect back on this journey,we have much to celebrate,as the benefits of this strategy are becoming evident.During the year,we were delighted to reach the major milestones of$100 million revenue,and$10 billion Funds under Management(FUM)a significant achievement in 1 Underlying cost to income rati

303、o is calculated as:total expenses excluding UPAT adjusted expenses and excluding tax,divided by total revenue2 2023 Roy Morgan Trusted Brand Awards ReportANNUAL REPORT 20245352Australian Ethical Investment Limited and its Controlled Entities Remuneration Reportfor the year ended 30 June 2024investme

304、nt standing and ESG commitment,our high quality product offering,recognised through multiple awards and accolades,and our outstanding talent and high performing people.These strengths position us very well to continue the positive growth trajectory we have achieved in recent years.The planned FY25 a

305、cquisition and integration of the Altius business,and the transition of our custody and administration platforms,which are expected to generate future unit cost savings and further profit improvement for the business over time,allow us to look forward with confidence.These results are made possible

306、through the significant contribution and commitment of our employees,with their high levels of engagement being a testament to the shared purpose that underpins the strength of our business.Remuneration and reporting changesAt the 2023 Annual General Meeting,the Companys remuneration report received

307、 a no vote of 27.01%cast on the resolution that the remuneration report be adopted.This constituted a first strike.2023 voting participation was low with shareholders holding only 35%of the issued shares of the company voting on the resolution to approve the Remuneration report.The 27%vote against t

308、he approval of the report therefore represented less than 10%of shares eligible to vote on the resolution.The Board has undertaken the following initiatives,which also address the proxy adviser suggestions raised in 2023:Weightings have been applied to the performance measures in the STI Balanced Sc

309、orecard to improve the transparency of STI achievement,with 50%assigned to financial measures to align closely with shareholder outcomes Increased transparency of STI achievement through improved disclosure of achievement outcomes Implemented a change to the determination of ESP vesting that directl

310、y addresses last years proxy adviser concerns regarding board discretion.In FY24,ESP vesting outcome is determined against a pre-approved metric,being Adjusted NPAT pre performance fee(see Section 4.4 for further detail)Improved disclosure relating to the Executive Long Term Incentive(ELTI)program,t

311、he long-term incentive scheme relevant for Executive KMPs as distinct from the broader and smaller employee share ownership program(ESP)which applies to all employees Shareholder approval will be sought for the CEOs Long Term Incentive grant(equity rights)under the ELTI.In addition,the Board has app

312、roved a number of planned initiatives to increase shareholder voting participation and to improve shareholder engagement in voting for the resolution.Remuneration philosophy and frameworkOur remuneration policy aligns to the philosophy of the Company that sees our people as key stakeholders in the C

313、ompanys success.Our remuneration framework aims to reward our management and employees fairly and competitively.Further,our framework aims to provide a direct link between contribution and reward and alignment with the long-term performance of the Company,and in turn,long-term value creation for sha

314、reholders.Each year,the Board and its People,Remuneration and Nominations Committee(PRN)review the remuneration framework and have oversight of remuneration arrangements for all employees,setting company key performance objectives to align employee performance and behaviour with remuneration outcome

315、s.Other than the reporting changes disclosed above,and changes that might be necessary to align to the Financial Accountability Regime(FAR),no changes are contemplated for FY25.Following a comprehensive market review in 2021,assisted by AON Advisory,a number of changes were advised and implemented.T

316、his year,the outcomes of these changes have been actualised,and saw:The Employee Share Plan(ESP)redesigned and Executive KMP allocations reduced in size to 10%of fixed remuneration to align with other employees.The ESP exists to ensure all employees are able to participate in company ownership and h

317、old an interest in the success of the organisation.This is in alignment with the Australian Ethical Charter which supports“the development of workers participation in the ownership and control of their work organisations and places”.The introduction of an Executive Long-Term Incentive(ELTI)to ensure

318、 appropriate focus on the significant growth aspirations of Australian Ethical.The ELTI is a separate program,comparative to competitor LTI programs,and applies to Executive KMPs and select Senior Executives only and reflects more stretching targets and hurdles to drive the achievement of long-term

319、objectives and deliver long-term shareholder value creation.The longer dated vesting periods(4 years)also aids the achievement of regulatory and ASX governance principles which recommend a greater weighting toward deferred remuneration within total compensation arrangements.All elements of our remun

320、eration framework seek to drive our growth aspirations which will amplify our impact and realise our purpose of better outcomes for all stakeholders,including people,planet and animals.FY24 variable remuneration outcomesThe PRN and the Board spend considerable time each year evaluating the contribut

321、ions and performance of the company,CEO and other Executive KMP to arrive at the variable incentive outcomes for each Executive KMP,measuring achievements against the Balanced Scorecard and individual objectives.Objectives combine both financial and non-financial business and customer outcomes whils

322、t ensuring an appropriate risk culture is maintained.All employees,including Executive KMPs,have objectives underpinned by the companys core values,whilst also incentivising ethical behaviour and positive customer outcomes.FY24 was a very successful year as outlined above.Reflecting on Australian Et

323、hicals business performance,outcomes for FY24 include:CEOs STI at 69%of maximum opportunity STIs for other Executive KMP range from 27%to 62%of maximum opportunity The agreed hurdle for achievement of ESP,3-year EPS CAGR of 10%based on Adjusted NPAT pre performance fee has been exceeded,resulting in

324、 the vesting of the 2021 ESP tranche for all relevant employeesNo ELTI was available for vesting in FY 24.The first tranche of ELTI awards,which were granted in 2021 will be assessed against the pre determined performance hurdles at the end of FY25 and will vest if those performance hurdles have bee

325、n achieved(see section 4.7.1).Looking forwardWe annually review our remuneration framework to ensure it remains contemporary and is aligned with the Companys strategy and industry trends,whilst remaining focussed on current and upcoming regulatory changes.We are committed to ensuring our remuneratio

326、n arrangements remain fair to all stakeholders and are effective in attracting and retaining talented people who are motivated,professional and contribute positively to Australian Ethicals growth aspirations.STEVE GIBBSChair People,Remuneration&Nominations CommitteeANNUAL REPORT 20245455Australian E

327、thical Investment Limited and its Controlled Entities Remuneration Reportfor the year ended 30 June 20241.Key Management PersonnelNamePositionTerm as KMP in FY24Executive Key Management Personnel(KMP)John McMurdoManaging Director&CEOFull yearMarion EnanderChief Strategy&Innovation OfficerFull yearKa

328、ren HughesChief Risk Officer&Company SecretaryFull yearMaria LoyezChief Customer OfficerFull yearRoss PiperChief Executive SuperannuationFull yearMark SimonsChief Financial OfficerFull yearLudovic TheauChief Investment OfficerFull yearNon-Executive DirectorsSteve GibbsChairFull yearKatherine Greenhi

329、llNon-Executive DirectorFull yearMara BunNon-Executive DirectorFull yearJulie OrrNon-Executive DirectorFull yearSandra McCullaghNon-Executive DirectorFull yearKMPs perform work for the Super Trustee and other entities within the AEI Group subject to an appropriate conflicts management framework.As a

330、 result of a reorganisation of Executive KMP responsibilities,the Board has determined that the Executive KMPs effective 1 July 2024 will be the Chief Executive Officer,Chief Financial Officer,Chief Investment Officer,Chief Customer Officer and Chief Risk Officer.2.Our peoplePeople PlanSuccess in ac

331、hieving our strategic goals is largely contingent on the quality and performance of our people and the health of our organisations culture.Our People Plan(people strategy)is focused on delivering people and culture solutions that will enable the growth of our business and transform our operating mod

332、el to become a global role model in responsible investing.The AE People Plan priority areas are:Diversity,Equity and Inclusion(“DEI”)to foster a DEI led organisation to enable better performance Talent and Capability to secure talent and capability now and for the future Performance and Reward to mo

333、tivate and reward our people to act in the best interests of our stakeholder groups Culture and Employee Experience to bring to life our Purpose Driven and High Performing cultureDiversity Equity&Inclusion Submitted our first Workplace Gender Equality Agency(WGEA)report which identifies gender pay gaps for private sector employers with 100 or more employees Australian Ethicals total remuneration a