SRI funds to get European standardDecember 2002
A Europe-wide accreditation standard for socially responsible investment funds is to be produced by spring 2003.
Work on creating the voluntary standard has been approved by the European Commission, which will pay the Paris-based European Sustainable and Responsible Investment Forum (Eurosif) to draw it up.
The standard will be developed along the lines of a 14-point code launched earlier this year by the Dutch Association of Investors for Sustainable Development. The Dutch standard encourages SRI fund managers to disclose how they choose their investments and what methods they use to assess companies.
It also asks them to make clear to companies what changes they need to make in order to meet the criteria adopted by the fund.
Matt Christensen, a former consultant recently appointed as Eurosif’s first executive director, told EP: ‘The idea is to create European-level transparency guidelines to find common ground on which SRI funds can operate. We will use the Dutch guidelines as a base on which to find something that can be applied across the continent.’
Pressure for a standard has increased in the past year amid concern among SRI practitioners that some new entrants into the field have adopted an ‘ethics lite’ approach, claiming to apply strict social and environmental criteria to their investments but in fact doing little of the sort.
Eurosif, which is made up of five social investment forums from France, Germany, Italy, the Netherlands and the UK, hopes that a Europe-wide standard requiring fund managers to disclose how they assess the social, environmental and ethical performance of companies will make it easier for investors to make comparisons when selecting SRI funds.
The UK-based New Economics Foundation think-tank, which has been one of the prime movers behind the idea, says the expansion of the SRI market is eroding ethical standards and that without an ‘ethical door policy’ the industry is likely to suffer ‘a loss of public trust or even a backlash’.
Among other things, it wants the standard to require funds to:
report regularly on how they put their stated principles into practice
state if they take account of standards such as AA1000, ISO14001 or SA8000 when assessing companies
show how the operating company or fund manager itself is adhering to ‘base-level ethical standards on governance and accountability’
demonstrate that their data is from ‘a range of sources’, not just from the companies they assess.
The standard will be drawn up by Eurosif with input from interested parties such as the NEF.
‘We hope to have something to show people before the end of spring 2003,’ said Christensen.
Once the standard is drawn up, SRI asset managers will be invited, probably through the national social investment forums, to begin implementing its principles.
The EC has also commissioned from Eurosif a year-long research programme that will review the SRI market in different European countries and will publish a website and newsletter to promote SRI. Grants for all the Eurosif projects amount to around €200,000 ($202,000, £128,000).
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