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The Guardian: Ethical funds fail to tackle climate change

As Tony Levene reports, many just target mainstream stocks

Tony Levene The Guardian, Saturday February 9 2008

Ethical funds stand accused of ignoring climate change concerns – with many socially responsible vehicles offering little more than mainstream stocks with the most morally objectionable companies screened out.

According to IFA Holden & Partners, which specialises in SRI funds, “a closer look at SRI funds shows many invest in large companies which are far from cutting edge in terms of providing climate change solutions”.

Peter Holden says: “Most funds’ top 10 holdings are surprisingly mainstream. Names like Vodafone and Royal Bank of Scotland occur again and again. Some hold BP, Shell or even Total. But few hold top 10 stakes in companies which are directly tackling climate change.”

And that, he believes, means ethical fund buyers have been missing out. Since January 2006, the FTSE All-World index has gained around 50% but the FTSE ET50 – an index of the world’s 50 largest environmental pure play companies has soared by 150%.

Of the 58 ethical funds listed in the new Holden Guide to Climate Change Investment, just one – Henderson Industries of the Future fund – has more than 50% invested in firms combating global warming.

Many funds, including those from Scottish Widows and Marks & Spencer, did not reveal their climate change exposure but of those that did, Legal & General had the least with under 1%.

But it is clear that ethical investors have become more critical of funds packed with banks, supermarkets and carbon emitters. Standard Life’s ethical funds will now scrap its airline stock holdings following investor feedback. But they have a long way to go to achieve climate change plaudits.

The Holden guide shows that just 11.5% of its £120m UK Ethical fund is invested in environmental shares. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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