Sunday 23rd October 2016                 Change text size:

FairPensions publishes ethical investment responsibility ranking

Photo: Ken Teegardin via Flickr

A report by responsible investment campaigners FairPensions has ranked 20 of the largest ethical investment houses into a responsibility ranking.

Ethical fund providers were scored on their levels of transparency, accountability and stewardship, as well as their screening process, and the FairPensions study found that many were falling short of fully engaging with investors.

F&C Investments came out top of the twenty ranked, followed by Standard Life and WHEB Asset ManagementPremier Asset Management and SVM Asset Management scored joint bottom. There are between 90 and 137 ethical funds, which represent a small percentage of the 3,000 or so available funds, which weren’t rated.

Savers choosing ethical products will want to know that their voice is being heard and their money is managed in a way which reflects their values”, said FairPensions’ head of policy and research, Christine Berry.

Our findings suggest that the ethical investment industry should be doing a lot more to ensure it stays relevant to the issues that matter to its customers.”

Alexis Cheang, director of governance and sustainable investment at F&C Investments, welcomed the FairPensions review of ethical funds.

F&C’s commitment to transparency, accountability and engagement – with both our customers and the companies in our funds – is fundamental to how we manage the Stewardship range of ethical funds”, she said.

Ethical investing is often not clear cut and our approach focuses on using the tools of both screening and engagement to deliver ethical investment products that meet our customers’ values but also drive companies to behave more responsibly.

We will use the results of this study in our commitment to continuous improvement.”

When it came to screening, the FairPensions report found that traditional ‘sin stocks’ – areas like alcohol, tobacco and armaments – still dominated negative screens, despite the fact that human rights and the environment are high up on many people’s agenda.

It found that the majority of funds (90%) publish some information about the ethical criteria they look to implement, but less than half (45%) publicly reveal the full extent of its holdings.

I want my fund to publish all the companies it holds”, said ethical investor Jonathan Chilvers.

Ethical funds should both screen their funds and engage with the companies they do hold.

I would like them to invest in a mixture of intrinsically ethical companies (renewables etc.) as well as large companies with reasonable corporate social responsibility (CSR) and well-documented supply chains.

The trouble is that none of the big companies are perfect, but it’s not really realistic not to invest in them at all.”

There are other useful rankings for ethical investment. We recommend, and checking to see if they’ve signed up to the UN Principles for Responsible Investment.

We’ll be revisiting the FairPensions report next week in the form of a feature, so stay tuned for a more in-depth analysis of the results and findings.

Further reading:

Poll maps growth of ethical investment understanding and demand

What kind of investor are you?

Do ethical funds and fossil fuels mix?

Drop in ethical fund sales part of a ‘general decline’

Sustainable investment flourishes amongst European high net-worth individuals

The Guide to Sustainable Investment (NEIW edition)

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