December 11, 2019
It’s good to know your Array dollars are invested in renewable assets.
But let’s face it, ‘renewable assets’ is a pretty abstract concept.
You might be wondering: what kind of ‘assets’? What proportion is invested where, and what does the money do? And what exactly does ‘renewable’ mean anyway?
So we’ve done a deep dive into our portfolio as it stands right now (in November 2019), and broken it down here for easy reference.
Investment type 1: Solar energy assets
Around 30% of the Array portfolio is invested in equity renewables. That means assets such as solar farms and the associated infrastructure around them - like Brigalow, Chinchilla and Swan Hill solar farms.
To make this happen, we partner with Impact Investment Group (IIG), who invest in a range of Australian solar assets on behalf of wholesale investors.
These assets have exposure to the prices generated by the electricity spot market, which are driven by consumer demand for energy. Or to put it simply, how your investment performs depends on the movements of the energy market in real-time.
Investment type 2: Domestic fixed-interest
Solar energy debt-based investments
We invest around 15% of the Array portfolio in debt-based renewable investments. In short, that’s the lending of money for the creation of renewable infrastructure.
Our partner here is Juice Capital, who arrange the financing, design and installation of solar systems on top of commercial buildings for small and medium size businesses. That allows the businesses (like hotels and manufacturers) to reduce their electricity costs by buying power from Juice Capital, rather than directly off the grid.
The whole set up is called a ‘Power Purchase Agreement,’ and it's another way your dollars are helping transform our energy future.
Impact and corporate bonds
Around 55% of our portfolio is in other lower-risk bonds. But lower-risk doesn’t mean they have no impact.
We invested in the VisionFund International, a bond where money raised is on-lent as micro-loans in developing countries. Most loans are to women and enable families to grow their businesses, increase incomes, manage their finances and strengthen their livelihoods to provide brighter futures for their children.
Another of our bond investments is data-centre operator Next DC. They provide the data technology behind the world’s largest cloud computing platforms (from the likes of Google, Oracle and Microsoft), with nine data centres employing 233 people across five Australian cities.
Data centres are usually major consumers of fossil fuels. But NextDC is breaking the mould. They’re powered primarily through large solar farms on their data centre rooftops, with the remainder of their emissions offset through certified carbon credits.
The portfolio also includes seven other bonds:
These are from:
• World Vision Fund
• Bendigo and Adelaide Bank
• Bank of Queensland
• Centuria Funds Management
• Challenger Limited
• Insurance Australia Group
• Liberty Financial
These give us the certainty of a quarterly interest payment, while supporting ethical investment. They’ve all passed our rigorous two-stage screening process. Details on this below.
Investment type 3: Cash holdings
Our portfolio rounds out with a small cash holding with St George Bank.
How we choose all of the above
It’s important to us – and no doubt to you, too – that our investments make the ethical grade.
For this reason, we use a two-stage screening process when picking our debt-based, fixed interest and corporate bond assets.
The first stage is known as ‘negative screening.’ This basically means we identify any companies involved in harmful industries – think fossil fuel, tobacco, gambling and weapons – and scratch them off our shortlist.
The second stage is known as ‘positive screening.’ As the name suggests, it means we identify companies involved in industries with a positive impact on the world, like renewable energy (obviously), recycling, conservation, energy efficiency, IT, healthcare, and more.
From this shortlist, we construct a portfolio that meets our target return and renewables targets. And only the best of the bunch become part of our portfolio – and yours.