Royal Dutch Shell Plc  .com Rotating Header Image

The Guardian: Is ethical saint or sinner?

The Guardian: Is ethical saint or sinner?

As fund managers celebrate a notable anniversary, Tony Levene asks if a conscience makes sense when it comes to investment

Saturday July 3, 2004

This week marks the 20th anniversary of ethical investment. Back in 1984 Friends Provident launched its Stewardship fund, and since then the ethical investment world has blossomed.

Co-op Bank was next, pioneering ethical banking, followed by pension funds which excluded arms companies and tobacco manufacturers. Assets managed in ethical unit trusts have soared to nearly £5bn.

But while the fund managers celebrate their success in hauling in so many ethical investors, what has been the impact on the real world? Has ethical investment worked?

Firms running ethical money insist their results are great. But critics say the high costs and investment restrictions associated with Socially Responsible Investment means ethics loses hard cash.

Not so, according to IFA Giles Chitty at SRI specialist Charcol Holden Meehan.

“The research is all inconclusive. You can cut it to produce the answer you want.

“There are poor funds and great funds in SRI, just as elsewhere. But the average is roughly the average of all trusts. The real question is whether SRI does any good over the long term,” he says.

Investor pressure means avoiding shares in a comp-any if it pollutes, becomes involved with a repressive regime, or employs child labour. And it means not buying shares in alcohol, guns, tobacco, and other “sin” stocks.

More recently, it has meant “engaging” companies rather than just avoiding them. Stockbroker Gavin Oldham, who runs The Share Centre, is on the Church of England General Synod and chairs the Christian Ethical Investment Group (CEIG).

“SRI is making a difference because it can bridge the gap between capitalist interests and ethics. It allows you to think through the theology of issues so you realise everything is shades of grey. We now realise that we can nudge companies in the right direction, even if they are short of perfection,” he says. Shell, he believes, still has a long way to go in corporate governance, pollution and Nigeria. “But it has made some progress in these areas.

The first stage must be a company becoming aware of the issues. But it is not just SRI. The oil industry has seen consumer boycotts of Exxon (Esso in the UK). CEIG has also had success in changing hardwood purchasing policy at builders’ merchant Travis Perkins, and in preventing major stores opening on Christmas Day.” Karina Litvack, who heads the SRI unit at Isis, the investment managers controlling Stewardship, believes companies are now much more willing to listen.

“We are talking to Tesco on sustainability. We realise it has an obligation to get the best deals, but what about the long term if this puts farmers out of business?” she says. “We want to engage in discussion but, ultimately, you have to sell if you fail to convince.”

But she acknowledges that not every holding, even in a heavily excluding fund like Stewardship, will meet with universal approval.

“We have shares in doorstep lenders such as Provident Financial and Cattles, partly because we can’t hold insurance companies or most banks. And they have a role with those suffering financial exclusion.

“Our concern now is to ensure that practices are not abusive. And we shall revisit this once the OFT report into doorstep lending is published in November,” she adds. Emma Howard Boyd, who heads the SRI unit at money managers Jupiter, believes the Ecology fund, with its themes of renewable energy water quality, public transport, healthy food, waste management and regulation beneficiaries, supports the technologies of the future.

“We have corporate responsibility briefs across all our £11bn of funds – not just the SRI-labelled,” she says.

Ethical research group EIRIS reckons its work can be helpful to firms as well.

“Our research on genetically-modified food was ahead of the fuss. So supermarkets had the chance to come up with policies that largely exclude GM foods that met public concern,” says EIRIS’s Peter Webster.

But Friends of the Earth is more sceptical. “SRI has made a difference. The City takes notice of us now. But while SRI has marketed itself very well, it may have oversold its influence. They often fail to relate to other funds controlled by the same people. They need consistency and joined up thinking,” says FoE’s Simon McRae.,3605,1252620,00.html

This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.