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The information contained in this document is general information only and does not constitute personal

financial advice. It does not take into account any person’s financial objectives, situation or needs. It has

been prepared by BetaShares Capital Limited (ABN 78 139 566 868, Australian Financial Services Licence

No. 341181) (“BetaShares”). The information is provided for information purposes only and is not a

recommendation to make any investment or adopt any investment strategy. Past performance is not

indicative of future performance. Investments in BetaShares Funds are subject to investment risk and

investors may not get back the full amount originally invested. Any person wishing to invest in BetaShares

Funds should obtain a copy of the relevant PDS from www.betashares.com.au and obtain financial and tax

advice in light of their individual circumstances.

Future outcomes are inherently uncertain. Actual outcomes may differ materially from those contemplated

in any opinions, estimates or other forward-looking statements given in this presentation.

Confidential – may not be distributed without the consent of BetaShares capital

Chairman, Asset Owners Disclosure Project

Former Leader of the Liberal Party 1990 - 1994

Former Leader of the Opposition

Economist & company director

Honorary Professorial Fellow, ANU Crawford School of Public Policy


Climate disclosure and financial risk – a new horizon

APRA’s increased focus on financial institutions’ approach to managing climate risk

The investment case for the BetaShares Global Sustainability Leaders ETF (ASX: ETHI)



Asset Owners Disclosure Project

Source: http://aodproject.net/


The carbon bubble

Source: http://carbontracker.org/wp-content/uploads/2014/08/Carbon-Tracker-Initiative-Unburnable-Carbon-Fig3-e1410364122638.jpg

“[Climate and carbon disclosure] must change if financial markets are going to do what they do best: allocate capital to manage risks and seize new opportunities. Without the necessary information, market adjustments to climate change will be incomplete, late and potentially destabilising.”

Mark Carney, Governor, Bank of England

G20 Financial Stability Board

• Chaired by Michael Bloomberg

• Representatives from the world’s biggest companies and investors

Possible costs

• A carbon price of $50 a tonne would put 9% of the ASX at risk

• If energy companies had to cut dividends by 5% per year from 2020 to zero in 2050, these shares would lose 40% of their value. This would equal an 11% fall in the world’s stock markets.


Avoiding a carbon bubble – the need for disclosure

Fossil fuel divestment is the removal of investment assets including stocks, bonds, and investment funds from companies involved in extracting fossil fuels.


Fossil fuel divestment

Source: https://gofossilfree.org/commitments/

The Paris Agreement’s central aim is to strengthen the global response to thethreat of climate change by keeping a global temperature rise this century wellbelow 2 degrees Celsius above pre-industrial levels and to pursue efforts to limitthe temperature increase even further to 1.5 degrees Celsius.

The Paris Agreement, United Nations Framework Convention on Climate Change


Consequences of the Paris Climate Accord


Bank of England Governor, Mark Carney, said last year that the entry into

force of the Paris Climate Agreement ‘brings the horizon forward’ for action

on climate change. It heightens transition risks and opportunities, makes

them more immediate, and ‘puts a premium on the ability of private markets

to adjust’. Australia’s ratification of the Paris Agreement last November

ensures we have a new horizon too.

The general point is that the transition now in train could potentially lead to

significant repricing of carbon-intensive resources and activities and

reallocation of capital.

Geoff Summerhayes, Executive Board Member

APRA, 17 February 2017

3 Key Developments:

Paris agreement

The agreement provides an unmistakable signal about the future direction of policy and the adjustments that companies, markets and economies will need to make.

FSB Taskforce on Climate-related Financial Disclosures

Several years ago, G20 Finance Ministers and Central Bank Governors perceived that a lack of company transparency on climate risks was impeding investment, credit and underwriting decisions and obscuring potentially systemic climate-related risks.

Legal opinion on directors' duties

The opinion found that company directors who fail to properly consider and disclose foreseeable climate-related risks to their business could be held personally liable for breaching their statutory duty of due care and diligence under the Corporations Act.



Two types of risks:

1. Physical risks stem from the direct impact of climate change on our physical environment – e.g.

resource availability, supply chain disruptions or damage to assets from severe weather

2. Transition risks stem from the much wider set of changes in policy, law, markets, technology

Confidential – may not be distributed without the consent of BetaShares Capital

BetaShares Global Sustainability Leaders ETF (ASX: ETHI)

Product Name: BetaShares Global Sustainability Leaders ETF

Investment Objective Provide exposure to 100 large global stocks (excluding Australia) which are climate change leaders and which are not

materially engaged in activities deemed inconsistent with responsible investment considerations.


BetaShares Global Sustainability Leaders ETF

ASX: ETHI

Key Information

ASX Code ETHI

Bloomberg

CodeETHI AU

IRESS Code ETHI.AXW

Asset backing Equities

Management

Fee0.49% p.a.

Expense

recoveriesEstimated at 0.10% p.a.

Inception Date 5 January 2017

Sector Allocation (%) Country Allocation (%)

As at 31 January 2017 As at 31 January 2017

Country Allocation (%)

As at 31 January 2017Top 10 Underlying Exposures

As at 31 January 2017

Company Weighting

Facebook Inc 4.5%

Apple Inc 4.3%

Home Depot Inc/The 4.0%

Intel Corp 3.9%

Roche Holding AG 3.7%

Visa Inc 3.5%

Mastercard Inc 2.3%

3M Co 2.3%

Medtronic PLC 2.3%

CVS Health Corp 1.8%

United States 72.1 Japan 7.2

Switzerland 4.1 Ireland 2.8

Hong Kong 2.8 Sweden 2.2

Britain 1.8 Denmark 1.5

France 1.5 Other 4.2

Information Technology 33.1

Consumer Discretionary 20.3

Health Care 19.3

Financials 8.3

Industrials 7.1

Consumer Staples 4.5

Telecommunication Services 3.8

Real Estate 2.8

Materials 0.8


Investment Methodology of ETHI’s Index

Climate Leaders

• >60% more carbon efficient than the

average for the company’s industry

• Superior performers on ‘Scope 4’ carbon

emissions

ESG Screens

• Fossil Fuels

• Gambling

• Tobacco

• Armaments

• Uranium/nuclear energy

• Destruction of valuable environments

• Animal cruelty

• Chemicals of concern

• Mandatory detention of asylum seekers

• Alcohol

• Junk foods

• Pornography

• Recent significant fines/convictions

• Human rights

• Supply chain concerns


ETHI’s Index v MSCI World ex-Australia (in AUD): May 2011-December 2016

Source: Bloomberg. The Index which ETHI aims to track is the Nasdaq Global Future Sustainability Leaders Index. You cannot invest directly in an index. The

inception date of the index is 29 April 2011. Past performance is not an indication of future performance of the Index or the ETF.

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ETHI’s Index v MSCI World ex-Australia (in AUD) v S&P Global 100

Source: Bloomberg. The Index which ETHI aims to track is the Nasdaq Global Future Sustainability Leaders Index. You cannot invest directly in an index. The

inception date of the index is 29 April 2011. Past performance is not an indication of future performance of the Index or the ETF.


Benefits of ETHI

• Diversification – with a single trade, investors can get exposure to a diversified

portfolio of sustainable, ethical companies from a broad range of global locations

• Cost effective – Fund tracks the performance of an index (no ‘active manager’ fees)

• Large company exposure – strategy invests only in large global companies

• Reduced administration – as an Australian domiciled fund, investors do not need to

fill out W-8 BEN forms, or risk any potential U.S. estate tax issues.

• Transparent – portfolio holdings, value of the Fund’s assets and net asset value per

unit available daily on our website

• Liquidity – available to trade on the ASX like any share


Portfolio Examples

Things to keep in mind


Investment risk: Investment returns are uncertain and will be influenced by the

fluctuations of the markets as a whole and other risks.

There is no assurance that an index that uses environmental, social and

ethical criteria to select securities will outperform any other methodology for

constructing an index.

Investors should seek professional financial advice before investing.

Past performance is not an indication of future performance.

See PDS for more information about risks.


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