Environment leads ethical investors' concerns

Tuesday, 27 November 2007 12:00

Ethical investors are most worried about the environment - with 53 per cent saying climate change was one of their top three concerns.

A poll by Standard Life Investments reveals eight out of the top ten issues concerning investors in ethical funds were connected with the environment.

Investors' top three concerns to avoid were 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.

"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," said Julie McDowell, head of sustainable & responsible investment at Standard Life Investments.

"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."

The third most important concern was human rights, with investors not willing to put cash into firms that operate in countries with poor human rights records, unless the firms have their own policies in place.

As well as choosing not to invest in firms that fail to care for the environment, the poll shows ethical investors are looking to businesses that try to counter climate change.

Some 70 per cent of ethical investors would put cash towards airlines that are reducing their environmental impacts, while 30 per cent would exclude airlines all together.

Some 91 per cent of investors would invest in firms trying to reduce their impact on climate change, while nine per cent would avoid all firms that are significant contributors to climate change.

Ms McDowell added: "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."

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