(Published in The Financial Times of 26 January 2003).
ABP, one of the world’s largest pension funds, has acquired a minority stake in Innovest
Strategic Value Advisors, a specialist US consultancy, in a move that underlines the growing
appeal of socially responsible investing.
The purchase, to be announced on Monday, follows last year’s launch of a $250m (£160m) SRI
fund managed by ABP and Innovest.
"For us, this represents a strategic investment in knowledge capital in an area which we believe to be one of the most critical factors driving the future of fiduciary investment," said Jean Frijns, chief executive of Netherlands-based ABP Investments, which manages the assets of the
140bn (£89bn) fund. "There is a growing body of evidence that companies that manage environmental, social, and governance risks most effectively tend to deliver better risk-adjusted
financial performance than their industry peers."
ABP is expected to build up an equity stake of 15-20 per cent in the medium term. State Street Global Alliance, a joint venture between ABP and State Street Global Advisors, the US fund
manager, has also agreed to acquire a minority stake.
Matthew Kiernan (pictured), Innovest’s founder and chief executive, said the deal with ABP would help the firm to move further into the "mainstream".
The firm, which has offices in New York, Toronto and London, has sought to distance itself from traditional "value-based" forms of SRI. "I don’t know any traditional SRI fund that would have an
exposure to companies involved in genetically modified foods," said Mr Kiernan. "Our approach
is more secular."
The assessment of a company’s non-financial performance is reflected in the weighting that its shares are given within an Innovest portfolio. The firm describes its approach as an "overlay" to a traditional portfolio.
As well as a provider of research reports, Innovest acts as an adviser to ABN Amro, Credit Lyonnais, ABP and Calpers, the giant US public pension fund.
The most common form of SRI among pension funds is the "engagement" approach – where company directors are lobbied. Yet Mr Kiernan believes that the weighting of stocks in clients’
portfolios can send a more powerful message.
"Engaging in a meaningful way is incredibly labour intensive," he said. "We prefer to ‘engage’ with companies through the capital markets."