20/11/2007

Environmental issues key for SLI’s ethical investors

Leading investment house, Standard Life Investments has confirmed that environmental issues continue to top the list of concerns of its ethical investors. The only ethical fund provider to survey its investors on an annual basis and to be guided by investor views in the development of ethical fund criteria, Standard Life Investments found that eight of the top ten issues of concern relate to the environment.

Clearing tropical forests (unless the company has a policy on reforestation and mitigation) and using high volumes of timber (without complying with internationally recognised standards) were the two related environmental criteria that emerged as joint number one key concerns. Operating in countries with a poor human rights record (without having policies in place to address human rights) appeared as the third key concern for investors.

In a new and separate section of the survey, investors were asked to indicate how strong a concern climate change is for them. For 17% of respondents, climate change is the top concern, with 53% of respondents viewing it as one of their top three concerns. Interestingly, 91% of investors surveyed would prefer to invest in companies that are doing their best to reduce their climate change impacts, whereas only 9% of investors felt that it was better to completely avoid investing in companies that are significant contributors to climate change. When asked specifically about airlines, 70% of respondents believe it is better to invest in airlines that are reducing their environmental impacts while 30% would exclude airline stocks completely.

The survey was issued to a sample of 3,000 of over 39,000 investors in Standard Life and Standard Life Investments’ ethical funds.

Julie McDowell, Head of SRI at Standard Life Investments, said;

“This is the 11th annual wave of our ethical investor survey, which we believe provides a strong indication of ethical investor sentiment and which we use to confirm our ethical criteria continue to reflect investor concerns. The fact that the environment is at the top of investor concerns seems entirely appropriate given the growing awareness of environmental issues such as climate change, biodiversity and the need for waste reduction. The section in this year’s survey on climate change and aviation will be carefully considered by our Ethical Committee as it reviews our current criteria.

“Interestingly, the three top issues of concern this year are negative criteria - suggesting that it is more important for ethical investors to avoid investing in companies whose activities they disapprove of, than to favour investment in companies whose activities are viewed positively.

“We also asked our investors to choose the three most important issues which our ethical criteria should favour as well as the top three to avoid. The results indicate that we should favour companies that encourage the quality of the working conditions in global supply chains; produce products which control pollution; and develop or use renewable technology. Investors chose as their top three concerns to avoid as investing in companies that operate in countries with poor human rights without having human rights policies; clear tropical forests without having a policy on reforestation and mitigation; and produce or supply weapons for military use.

“Overall, our survey results indicate the importance of environmental and human rights issues, and a strong concern about working conditions in global supply chains. We will consider closely what changes, if any, should be made to our ethical criteria so that our investors can continue to feel confident that their investments sit harmoniously alongside their ethical views.”