Investors who are kept in the dark

Investors who are kept in the dark

Many of Britain's biggest fund management groups are keeping people in the dark about the environmental and social impact of the billions of pounds they invest in shares on their behalf.

That is the claim being made by the campaigning organisation FairPensions in a new report being published on Monday.

It says these fund managers, who invest vast sums of money on behalf of individual investors, pension funds and charities, are not doing enough to tell them how they are reacting to the ethical concerns and financial risks associated with issues such as climate change, human rights and corruption.

The survey's star performer was F&C, which is majority-owned by Friends Provident and well-known for its Stewardship range of ethical funds. F&C scored 100% when rated for the information it provides to investors and its commitment to "engagement", where a fund manager with money tied up in a company aims to improve its ethical performance by talking to senior management and voting at AGMs.

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Three companies shared second place, each scoring 83%: Hermes, manager of the huge BT pension scheme, Insight Investment, which is part of the HBOS banking group, and Morley, Norwich Union's fund management arm.

Propping up the bottom of the table were Goldman Sachs Asset Management and State Street Global Advisors, both of which scored 0%, while Scottish Widows and Barclays Global Investors could only manage 17% and 20% respectively.

The Fund Manager Responsibility Survey carried out by FairPensions found that 15 of the 20 biggest UK fund managers do not disclose responsible investor policies that address environmental, social and governance (ESG) issues. The five that do are F&C, Insight, Morley, Legal & General and Standard Life.

Meanwhile, only two of the top 20 (F&C and Insight) made detailed public disclosures on their engagement with companies, while two more (Morley and UBS Global Asset Management) provided details of one or two examples of where they had had a dialogue with companies about their practices.

The report's authors asked a series of questions about the information each company made available to the public on how it deals with environmental and social issues, and about its attitude to engagement.

FairPensions says that in the same way that the Northern Rock crisis has hit confidence in the entire banking system, the investment industry could find itself equally vulnerable to financial turmoil if an ethical crisis affecting one major player were to have a knock-on effect on other firms.

Responding to its zero score, Goldman Sachs says it works with clients to create portfolios that address their concerns about the environment and other issues. State Street declined to comment.

The best - and the worst

F&C Asset Mgmt 100%

Hermes Pensions Mgmt 83%

Insight Investment 83%

Morley Fund Mgmt 83%

Goldman Sachs Asset Mgmt 0%

State Street Global Advisors 0%

Source: FairPensions, based on transparency and engagement in ESG issues

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