Fund managers promote greater SRI scrutiny
Leading ethical and environmental fund
managers are expecting greater scrutiny by the media and critics following the
arrival of socially responsible investment (SRI) disclosure regulations earlier
this month.
Recent press reports have called into
question the investment decisions of ethical or green funds. The NPI Global Care Income
Fund has come under fire for investing in Thames Water, a company that has been
prosecuted for pollution.
But Craig McKenzie, director of Friends
Ivory & Sime's (FIS) socially responsible investment research unit, said he
was disappointed by press coverage which had implied that pension funds would
be screening stocks out of portfolios.
FIS promotes engagement as the SRI
solution for pension schemes, but McKenzie stressed this was not a soft option
for fund managers. He said a serious SRI operation would employ a separate SRI
research team to build up relationships with companies.
Fund managers should be judged by how
many people they are currently employing in this field, said McKenzie.
"In our experience it is rather hard
work and expensive to do. I am hoping to see job advertisements from people
like Phillips & Drew to prove they are taking their engagement claims
seriously."
Toby Belsom, a research analyst at
Henderson Investors' SRI unit which runs the NPI fund, said two members of the
research team had recently visited Thames Water to discuss its environmental
strategy. He said the utility company scored highly on its commitment to the
environment.
Belsom said these visits showed the
importance of constructive engagement which could only be carried out with an
internal research team.
Pensions Week
24 July, 2000
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