Ethical Performance
inside intelligence for responsible business


Eurosif targets institutions

July 2005

Transparency guidelines for institutional SRI funds are to be developed by the European Social Investment Forum (Eurosif) in the wake of the successful introduction of its guidelines for retail SRI funds.

'There's been a lot of interest from the institutional side, so we've started the process of developing similar guidelines for that sector over the next 18 months,' said Jerome Tagger, Eurosif's head of research.

'Most of the continental European fund managers think the retail guidelines work well for their institutional products, but the main issue will be the different approaches taken between funds on the continent and those in the UK.'

Twenty-six European fund managers, including nine from the Netherlands and eight from the UK, have filed compliance reports to Eurosif which detail their research methodologies, whether they have in-house or external research teams, and how they use research results to determine investment decisions.

In addition, they outline the internal CSR policies and programmes of their fund management companies. All are published on Eurosif's website.

Two North American fund managers - Calvert in the US and The Ethical Funds Company in Canada - have also filed reports, even though the guidelines were written with only Europe in mind. The disclosure practices of SRI fund managers in North America have become a sensitive issue since autumn 2004 when Paul Hawken, executive director and founder of the Natural Capital Institute, a California-based CSR think-tank, publicly castigated them for failing to practise the openness they demand of companies in which they invest (EP6, issue 7, p3).

Hawken has supported the Eurosif guidelines, but although some SRI fund managers in the US would like to see similar measures there, no consensus appears yet to have been reached on whether to develop US-based guidelines.

Fund managers that have filed transparency reports in Europe include ABN Amro and ING Bank (both Netherlands), Banca Etica (Italy), Bank Sarasin (Switzerland), Dexia Asset Management (Belgium), F&C and Friends Provident (both UK).

The transparency guidelines were developed partly as a result of the European Commission's stated desire for pension and retail investment funds to disclose any SRI policies they may have, and in response to concerns over a lack of industry standards or an SRI quality mark.

Now that so many reports are being filed, the Ethical Investment Association, a UK training body for independent financial advisers specializing in ethical investment, is to analyse the information and rate retail fund managers' responses.

Eurosif also expects to work with consumer bodies and other research groups over the next year in an effort to ensure that the responses are verified and readily available to individual investors in pooled funds.

Henderson Global Investors has changed the criteria of its £55million ($100m) Ethical Fund, which will now invest exclusively in companies 'that provide solutions to sustainability challenges' - typically in the clean energy, environmental management, public transport and healthcare sectors. As a result, the company, which manages £1.13billion along SRI lines, has renamed the fund the Henderson Industries of the Future Fund.

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