Ethical Performance
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fund managers ‘unmoved by direct action activists’

July 2000

Pressure groups and activists campaigning on social and ethical issues have little direct impact on City fund managers and analysts, a survey has shown.

A poll of fund managers and analysts by the survey organization Opinion Leader Research found that only six per cent of those questioned said pressure groups had any effect on their institution’s policy on social and ethical issues.

The survey, commissioned by Control Risks Group, an international consultancy that advises businesses how to reduce the impact on their activities of political instability and social change, was based on 104 interviews with a cross section of 68 fund managers, 26 analysts and ten City journalists.

Clients (34 per cent) were the stakeholders most frequently cited as having an impact, followed by trustees (21 per cent) and shareholders (15 per cent). Of the eight fund managers whose institutions had ever sold shares or divested an interest as a result of external pressure, five said this was at the request of clients. Researchers concluded that ‘there is a clear message from the City that extreme activism and direct action from pressure groups does not directly influence their investment decisions.

‘Moreover, fund managers appear to be saying that it is positively their responsibility on behalf of their clients not to succumb to such pressure from direct action groups.’

However, the survey noted that while the driving forces for change on social and ethical issues ‘lie outside the City’ – and that fund managers are still not proactive, many more of them are now responding to client demands for socially responsible investment.

It found that 74 of those questioned said social and ethical matters were ‘more of a consideration’ than they had been five years ago, and a similar number believed they would become more of a consideration over the next five years.

‘At the very least, financial institutions are beginning to appreciate that it is becoming increasingly important to take social and ethical considerations into account,’ says the study.

But it warns there is ‘a perceptible time lag between what institutions are saying and what they are doing’.

It found that while 39 per cent of investors and analysts said their institution had a process in place to assess the social, environmental and ethical performance of companies, more than half (56 per cent) thought that social and ethical factors were ‘not very’ or ‘not at all’ important in assessing a company.

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