For Worldwise Investor, a 'responsible' fund is one that follows the UNPRI (UN Principles of Responsible Investment), which tries to encourage investment houses to put Environmental, Social and Governance issues at the heart of the investment process.
There are now over 850 signatories with $25 trillion assets under management to the statement or principles which summarises as follows:
ESG: Put Environmental, Social and Governance issues at the heart of the investment process.
Engagement: Engage with companies to help them change their practices.
Openness: Encourage companies to report and disclose more fully on ESG issues.
Education: Help to educate investors.
Collaboration: Amongst Investment Houses.
Disclosure: By Investment Houses of their activities within ESG.
Of course this is a subjective area and how much an Investment House actually utilises a process around ESG and how they interpret this into physical actions varies wildly among the signatories.
Historically it has been the SRI funds who can claim to put these considerations into practice and thus funds which specifically claim to be ‘responsible’ normally have ethical screens, as they have the systems in place to assess a company on their Environmental Social and Governance issues.
However, this may not be the case in the future, because to be ‘responsible’ as defined by the UNPRI does not mean that a fund must have an ethical screen. Indeed a fund manager who decides to pick companies in all areas of the stock market, including Oil & Gas, Mining and Tobacco, could still be deemed to be following a ‘responsible’ approach.
Jupiter Environmental Income has ethical screens and is changing its name to the Jupiter Responsible Income fund in order to broaden its stock selection. This demonstrates the wider remit that a ‘responsible’ investment fund can take. It also shows that embedding Environmental, Social and Governance issues into the fund process does not mean that the fund will invest environmentally.
Mark Hoskin is a Partner at Holden & Partners. Holden & Partners are Chartered Financial Planners who provide financial advice to high net worth clients, the majority of whom have a significant interest in ethical or environmental issues.
Mark Hoskin graduated with a History degree from Keble College, Oxford and went on to become a Chartered Accountant with Price Waterhouse. He cofounded Holden & Partners in 2003 and is a Certified Financial Planner and Chartered Financial Planner. Holden & Partners set up Worldwise Investor to help both advisers and investors understand quickly and easily how they can benefit from ethical and environmental investment in the UK market.
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