Good Money Week 2016

“Fund EcoMarket: bringing sustainability, ethics and investment

together”

Julia Dreblow BA Hons, Dip PFS

For information only.sriServices is not authorised to offer advice. This presentation is for use by UK financial services professionals only.Registered company -  SRI Consultants Ltd,  03904843

Introduction

Who? sriServices’ aim is to grow ‘Sustainable, Responsible &

Ethical’ Investments 25 years in FS - previously Friends Provident, UKSIF

Director, NPI ‘Highly Commended’ - Corporation of London ‘Sustainable

City Awards’ 2015 (SF), finalist 2016. Shortlisted for two Investment Week SRI awards 2016

What? Online adviser friendly tools & support

sriServices.co.uk & FundEcoMarket.co.uk Consultancy, partnerships & media

Our topics...

An introduction to the diverse world of (what I call) SRI

Matching needs to options

Diversity illustrated

Tips on building this area into your processes

Why bother & what next?

A diverse market with unmet retail demand

Rapid & diverse international expansion UNPRI ‘s 1000+ signatories, manage over $60 trillion

worldwide Eurosif ‘Engagement and Voting’ assets exceed £1.434 trillion

2015 Impact Investor(.co.uk) c£36bn Worldwide 2014 $3.4 Trillion ‘Divestment’ fossil free campaign 2016

Highest ever retail net ethical fund sales UK 1.2% of total (source: IA) 2015 c£15bn Total FUM EIRIS, 2015

Potential demand c30-50% 43% of people would like to move money away from companies

involved in ‘unethical / unsustainable activities’ 34% of investors wanted to ‘help build a sustainable UK

economy'... (UKSIF, 2013) SLI 2015 Millennials research is similar

Diverse, dynamic & high profile issues

The diversity of issues makes this area complex to advise on...

• Ethical

• Social

• Environmental

• GovernanceTesco accounting issues (UK 2014)Rana Plaza disaster (Bangladesh 2013) BP Deepwater Horizon (Gulf of Mexico 2010) . VW governance issues (Germany 2015), Growing water scarcity

Different approaches

Funds approach issues in different ways...

Support

Avoid

Engage

‘Stranded Assets’ risk & the Bank of England (2015) comments. UN Global Development Goals (2015), Divest ‘go fossil free’ campaign, Tesla

Matching needs to options Plot issues, approaches, aims & financials?

The result?

ESG Integration

Responsible Ownership

Sustainability Theme

Ethically Balanced

Negative Ethical

Environmental Theme

Social Theme

Faith Based

Highlights diversity, focuses on ‘core commonalities’ – where options are ‘ethically similar’

A short cut to finding ‘ethically relevant’ options

Helps match ‘what a client wants’ to ‘what funds really do’

Noting: Variation within styles Crossover between styles Clients may need a ‘deeper

dive’

Meeting needs with ‘SRI Styles’...

Diversity illustrated: Fund EcoMarket snapshot October 2016

Negative Ethical (87)Ethically Balanced (89)Sustainability Themed (71)Environmental Themed (48)Faith Based (5)Social Themed (4)

Total: 349 entries (all regulated, retail onshore

funds plus some extras) 75 OEICs/UTs 21 ‘Corporate

Activity’ ‘Styles’ fund

breakdown opposite

OEIC options include: 7 UK10 Fixed Interest12 Mixed Asset22 Global4 Income

Fund EcoMarket survey responsesNo single fund caters for all...

Policies Features Corporate

Avoids Tobacco 38 Limited Exclusion policy

15 Publish Full Voting Report 15

Avoids Armaments Manufacture

40 Balances Pros & Cons / Best in Sector

22 Integrates ESG into all/most fund research

33

Climate Change / GHG policy 34 > 50% Large Cap 10 Reviewing carbon/fossil fuel exposure for all funds

15

Coal, Oil & Gas Majors excluded

30 RSMR Rated 29 In house voting expertise 16

Animal Welfare policy 33 Faith Friendly 10 Responsible ownership / ESG a key differentiator

16

Social policy 33 Positive Selection Bias 35 UK Stewardship Code Signatory 17

Sustainability policy 46 Eurosif Transparency 25 Vote all shares at AGM’s & EGMs

12

Measures Positive Impacts 16 Norms Focus 10 ALL OF THE ABOVE 0

Building this area into your business processes

Integrate this into regular processeseg products, % portfolio, reviews

Record your findings

eg - for reference, compliance & audit trail

Refine SRI research

eg - issues, attitudes, other factors

Identify key areas of interest

eg - issues, approaches, styles

Identify interested clients

Are you interested in ethical, social, environmental or faith related issues?

Supplementary fact finding options

Fund EcoMarket - a free resource

1. Ethical / SRI information only

2. ‘SRI StyleFinder’ Fact Find Questionnaire

3. Fund filter options: Name, Investment Type, Product, SRI Style, SRI Policies, Other SRI Features, Corporate Activity

4. ‘Find Adviser’ button

5. Adviser Support area & links

6. Full report generation for audit trail

An adviser’s view...“… I think that your site is the missing link for many IFAs who are nervous/anxious about raising ethical investing with their clients.

It gives them a process and an audit trail – and I suspect many of those advisers who don’t raise ethical investing with their clients don’t raise the issue because they have no process in place if the client was to say that they did want to invest ethically.

This is what happened to me, and it was only because I wanted to offer ethical investing to my clients that I discovered your site through my own research.”

Bringing sustainability, ethics and investment together

Next steps:

‘Can you be sure to offer ‘appropriate’ advice without discussing personal values /SRI?’ Adviser ISO, changing values, growing interest

How can this area enhance your clients’ experience?’ eg for different groups of clients and interests (charity, pensions)

‘How can this area benefit your business?’ Younger clients, new recruits, changing opinions, reputation, trust ...

‘What changes do you need to make for this to be a success for you?’ Initial & supplementary fact finding

For further information:www.FundEcoMarket.co.uk@JuliaDreblow