Ethical Performance
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UK dominates SRI holdings

January 2002

UK companies dominate the upper echelons of a league table of stocks most commonly held by European socially responsible investment retail funds, according to research by the Sustainable Investment Research International Group (SiRi), a coalition of national SRI research bodies.

UK-listed companies account for five of the top ten ‘most frequent’ stocks in the funds’ portfolios (see box below).

They also account for ten of the top 20, another seven of these being US-listed firms. Nokia (Finland), Ericsson (Sweden) and ING Group (Netherlands) were the remaining three stocks in the top 20 investments most commonly held by the 251 SRI European retail funds studied.

Most companies in the top 20 are in the pharmaceuticals, healthcare, telecoms and banking and financial services sectors. There is only one retailer (Tesco) and one transport company (FirstGroup).

The dominance of UK companies is partly explained by the number of UK SRI funds – 62 when the survey was carried out in June. France had the next largest number (38), followed by Sweden (34), Belgium (33), Germany (22), and Switzerland and the Netherlands (16 each).

However the findings suggest that while UK-based fund managers continue to have a commanding position in the European SRI market, with holdings that represent 38 per cent of its total assets, their relative dominance is decreasing.

In December 1999 the UK accounted for one in three SRI European funds, but by June 2001 this figure had fallen to one in four.

The picture is similar when one looks at asset values, with the UK market growing 48 per cent over the same period, while the French market grew by at least 1700 per cent, though from a much smaller base, and the German market grew by at least 300 per cent.

SRI assets held in funds domiciled in Italy shrank, ‘influenced by the negative performance of some funds’.

The survey understates the UK position as it was confined to funds that meet the terms of an EC directive allowing them to be marketed in all EU countries. It therefore excluded most unit trusts – the longest-established SRI vehicle for UK retail investors.

It also excluded specialist clean technology funds, products available only to institutional investors and funds held in private client portfolios.

Even so, assets held by European SRI funds overall grew by more than 40 per cent between the end of 1999 (€11.1billion) and mid-2001 (€15.6bn). This still represented only ‘a very limited portion’ – just 0.43 per cent – of total assets managed in European funds, although in the UK alone it amounted to 1.03 per cent.

The survey covered retail funds in 17 European countries that used ethical, social and environmental screens for portfolio selection and were ‘marketed as SRI products’.


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