Investing ethically to ‘effect change’
Hugh Cuthbert, co-fund manager of the SVM All Europe SRI Fund, spoke with Alex Blackburne to explain how, by investing wisely in willingly-improving companies, his fund is designed to effect change within the global economy.
Each ethical investment fund, whilst possessing similar underlying qualities, is different in its approach to investing. Some opt to focus on a select group of ‘good’ sectors; some seek out progress; whilst some look at investing in companies that are innovating in their field.
The SVM All Europe SRI Fund is very different in that it does not screen out many industries, even though they might be traditionally classed as unethical.
“We have four principle areas of focus”, says the fund’s co-manager, Hugh Cuthbert.
“We look at the personnel, society and stakeholders, human rights, and the environment … We’re not looking for best-in-class and we’re not looking for industries of the future.
“We’re trying to use our clout as shareholders to effect change, and we’re looking to effect change in those four principle areas.”
In contrast to funds that Blue & Green Tomorrow has profiled previously, Cuthbert added that there were less than a handful of industries that the SVM All Europe SRI Fund excluded.
“When we looked at our potential investor base, we found that certain aspects such as tobacco, pornography and weapons are simply too abhorrent for the majority of investors in an SRI fund”, he explains.
“At the same time, we believe that we should invest in industries where others may not go.
“We’re trying to keep the negative screening as minimal as possible, because the fund is about change; it’s not about ignoring industries simply because they’re considered to be abhorrent by some potential investors.”
This novel approach to investing breathes fresh air into the ethical investment sector. It is good to hear about funds that completely reject unethical industries, but on the other hand, it’s refreshing to come across one that is striving to effect change within the economy.
Launched in October 2006, Cuthbert’s fund has assets under management of £6.9m.
One of the companies that it invests in is Yule Catto, a UK chemicals company.
“It’s a good example of not necessarily the greenest of industries”, says Cuthbert, “but again, our philosophy is that it’s a chemicals company so it has opportunities to do a great deal of harm to the environment, so let’s ensure that it has the processes in place that will help minimise the impact it has.
“In some ways, Yule Catto has shown a great willingness for improvement, and it’s a good example of where we’ve made money and at the same time we think we’ve prompted change from an SRI perspective as well.”
As with most of the investment companies that B> has spoken to, SVM Asset Management’s range of funds also includes vehicles that aren’t billed as specifically ethical or SRI. But, according to Cuthbert, the company is “100% behind” the ethical investment sector:
“The owners and the management of SVM have very much put their money where their mouths are in terms of launching this fund.
“I’ve got quite a long track record of this, and at previous firms where I’ve worked, if there hasn’t been an ethical fund, we’ve launched one.
“The SVM All Europe SRI Fund is now a core product. It’s been a very good performing fund for us.”
Yet again, the one myth that often chokes the ethical investment sector – a sacrifice of performance for ethics – is refuted by an expert in the field.
Cuthbert went on to explained why ethical investment should be the norm. “When I first started doing this, the ethical investment industry was viewed as an annoying anomaly and one that would probably go away”, he says.
“In some ways, SRI investing wasn’t so far up the agenda then … Yes, there were NGOs, and certain investors were very interested in these issues, but the mainstream community didn’t have the foresight to see that these issues, regardless of whether you morally believe in them, are very important economically. As the years have progressed that thinking has changed.”
In line with the fund’s mantra of sustainable investment, he added that responsible financing was imperative for the future of our economy.
“SRI is obviously important from a moral perspective, but what’s absolutely key for me, is that it’s important from an economic perspective”, he claims.
“I genuinely think that if you add something to an investment process, such as this fund’s four principles, you are doing just that.
“You are adding to the investment process, you are not detracting from it. And who would argue now that the environment isn’t important economically?”
As Ben Goldsmith told B>, “There’s no business to be done on a dead planet”. Therefore, thinking carefully about environmental impact and ensuring money is invested in the right places, is undeniably important.
For more information on the SVM All Europe SRI Fund, take a look at its website. Alternatively, for more general information on ethical investment, fill in our online form and we’ll point you in the right direction.
Previous fund profiles:
IM WHEB Sustainability Fund
Kames Capital Ethical Equity Fund
Quadris Environmental Forestry Fund
Ludgate Environmental Fund
7IM Sustainable Balance Fund
Allianz RCM Global EcoTrends Fund
Cheviot Climate Assets Fund
Skandia Ethical Fund
Premier Ethical Fund
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