AMP-owned Henderson Global Investors has joined Norways Storebrand Asset Management and Trillium Asset Management from the US as the worlds best SRI fund managers according to a new report commissioned by Mistra, a Swedish government research body.
Mistra funds sustainability research has a portfolio of Skr4 billion, about $US400 million. Since we support environmental research for sustainability, our board decided last year that we should have a vision that our assets should work in the same direction, says Eva Thornelof, head of asset management and administration at Mistra.
But SRI is like a thousand flowers in the field. So many colours. Its not like traditional financial markets where everything is in place and understood.
Mistra commissioned KPMG Consulting to study whether SRI approaches would affect risk and return levels on investments. KPMGs paper found SRI would not have an adverse impact, so Mistra then employed Miljoeko and UK-based consultants SustainAbility to assess the SRI market in terms of products and services. This report is called Screening of Screening Companies.
The study included only European and US funds and research groups. The report says: A rapid SRI-development is taking place outside Europe and the US but, at the moment, most of these products/services are newly started and therefore lack the necessary experience to be included among the best-practice candidates in this study.
The study examined 143 SRI products from 77 managers and 24 research organisations in Europe and the US. It study concluded that Henderson Global Investors, Storebrand Asset Management and Trillium Asset Management are worlds best practise SRI fund managers and that Innovest (US) and Ethibet/Cordius Asset Management (Belgium) provided worlds best practise SRI research.
Mistra stipulated that SRI products and services should consider company strategies, organisation and management systems and that the fund benchmarks companies environmental performance. Mistra excluded all negative screened funds. We dont favour negative screens, says Thornelof. Its the low water mark, just to take away the bad guys.
However, a tender for applying a negative screen across the bulk of Mistras portfolio closed on Tuesday this week. Thornelof is expecting this screen will closely mirror the one adopted by Swedish state pension fund, A-P Fonden 7 which excludes all companies that fail to comply with UN conventions.
More importantly we will start by moving 10-20 per cent of our assets into some kind of SRI profile management, says Thornelof. There are two ways we could go, we could buy good research and then take on a manager, or we can just buy into a fund.
A short-list of best practice fund managers and researchers has been invited to meet with Mistra on January 30. From there, the board and management will decide on the way forward on its SRI strategy.
Within Sweden this development [the Mistra survey] is seen as extremely important and within Europe its important because it lends legitimacy to SRI, says Seb Beloe, New York based director of SustainAbility.