Friends Life: sustainability risks directly impacts shareholder value

Insurance and pension provider Friends Life, which manages funds worth around £100 billion, has reaffirmed its commitment to responsible investment. In the firm’s corporate responsibility report, it notes that it has a “duty” to ensure that its funds are invested responsibly.

The report states, “We know that the management of environmental, social and governance (ESG) risks relates directly to performance and shareholder value, so we incorporate these issues right across our investment decision-making processes.”

Friends Life, formally known as Friends Provident, was an early leader in the field of ethical investment. The firm launched its Stewardship funds in 1984, to give investors an opportunity to invest in line with their values and morals. These funds were the first range of UK ethical retail funds to be set up.

Today, the Stewardship fund’s ethical policies cover a range of issues, such as climate change, environment, diversity, supply chain labour standards and corruption. The investment criteria is constantly evolving to reflect changing need, issues and opinions. For example, during 2013 the firm updated it policy on coal.

The report also notes that the impacts of climate change are becoming “apparent in the UK, with the frequency of extreme weather conditions increasing”.

It adds, “There may be dissenting voices and arguments about the causes of climate change. However, in the insurance industry, a precautionary approach is a model we’re used to adopting and one we advocate in relation to climate change and environmental degradation.”

Amongst its corporate responsibility achievements in 2013, Friends Life lists being reaccredited with the Carbon Trust Standard, becoming a signatory to the government equalities office ‘think act report’ campaign, which aims to ensure gender equality in the workplace, and being accredited as a living wage employer.

Friends Life, along with Ecclesiastical and Aberdeen, was named as one of the most popular fund managers for financial advisers giving advice to clients on ethical investment, according to Blue & Green Tomorrow’s Voice of the Adviser survey. The company was also the fastest-rising choice, with 17% growth when compared to the previous year.

Photo: Friends Life

Further reading:

Schroders to take responsibility for Friends Life multi asset and equity portfolios

Report critics pension providers over responsible investment

The days of investors being unaware of ethical investment options are behind us

Friends Provident, Ecclesiastical and Aberdeen top ethical choices for advisers

Financial advisers bullish about economy and advice market