An SRI outlook that aims for mutual benefitDecember 2009
Mike Scott talks to Andrew Gay of UIA, an insurer to trade union members that tailors its investments to the social and environmental concerns of some of Britain’s most politicized stakeholders
UIA is an unusual organization. A mutually owned industrial and provident society that’s been offering insurance to British trade union members since 1890, it has taken its particular circumstances and used them as the basis for doing business with a social and environmental imperative.
As the only such society that provides insurance to its members, UIA feels it has a special position in the financial sector. ‘We try to be as competitive as we can, but the real difference with us is our personalised services,’ says deputy managing director Andrew Gay on the day that floods engulf towns in Cumbria in north west England. ‘All insurers will be inundated today, but at the bigger players you’ll have to wait minutes for the phone to be answered – here it is four seconds.’
As an insurer that needs to guarantee it can pay future claims, it is also an investor, albeit on a much smaller scale than commercial insurers such as Axa and Aviva. Because it services politically- and socially-aware trade union members it has been running an SRI-based investment fund since 2002 and is aware ‘that we need to consider SRI as part of the way we brand ourselves,’ says Gay.
Given UIA’s size, it did not have the resources internally to manage an ethical investment policy, so in 2002 it held a beauty parade of the leading SRI managers, plumping for Morley, now part of Aviva, as its advisor on such matters. It maintains a close relationship with the Morley team, which keeps a watchful eye on the issues that are particularly applicable to UIA as a union organization.
‘Our members tend to be particularly interested in social aspects of investment such as sustainable supply chain management and international labour standards,’ explains Gay. The group regularly takes the views of its members in customer forums and encourages less formal feedback as well. As union members with a vocal tradition, its stakeholders mostly appear ‘happy to raise issues of concern’.
One concern that’s especially important to UIA, but which other SRI investors may not normally consider, is involvement in projects that have been funded under the UK government’s controversial Private Finance Initiative (PFI), which secures private funding for public institutions in return for part-privatisation. ‘Our members are particularly concerned about maintaining services in the public sector, so we won’t invest in companies that derive a large percentage of revenues from PFI,’ says Gay.
With such a workplace focus, UIA members have until recently been less interested in environmental issues. But they have now come to the fore, with UIA, like any insurer, seeing an impact on its own business from an increase in the frequency and severity of extreme weather events such as the Cumbria floods.
Issues that have slipped down the agenda include child labour – probably because standards have improved – baby milk formula, and nuclear power, ‘which was always tricky because we have members who work in the nuclear sector’.
‘The board is aware of its obligations to achieve the best returns on our investments and we take that very seriously, but we will only do that where it can be achieved in accordance with our ethos and beliefs,’ Gay says. ‘At the same time, what our members think is important changes over time. So we have to reflect that.’
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