Socially responsible investment fund strategy
Our investment approach
Our objective is to achieve long term capital returns within a principled framework. We start with a 'stock picking' approach - looking for individual companies with sound financials, good management, growth prospects and the potential to generate strong cash-flow. If the financials look attractive, we apply our negative and positive screening criteria, capturing a company's socially responsible credentials.
It's a principled yet intensely practical approach, because there is a link between positively screened, well managed companies and good business - these are the companies of tomorrow.
Our long term vision
We usually take a position in companies whose potential is in their corporate plans for long term business growth. We avoid churning shares for the sake of it, preferring to build enduring relationships with the companies we invest in.
Negative and positive screening
Exclusion criteria - the negative attributes we avoid:
We screen out companies earning more than 10% of pre-tax profits or turnover from:
alcohol production
gambling operations, like betting shops, internet websites, horse and greyhound tracks, lottery selling outlets, licensed bingo halls or casinos and supplying gaming machines paying cash prizes
pornographic and violent material
tobacco production
strategic weapon production.
We also actively incorporate the following in our criteria:
animal testing: we don't invest in companies using animals to test cosmetic or household products. We do invest in companies that utilise animal testing for pharmaceutical research, but would encourage them to develop and use alternatives, like computer modelling
oppressive regimes: companies operating in countries with oppressive regimes are considered on a case-by-case basis. We aim to distinguish between activities that benefit people and those that support the regime.
The positive attributes we look for are generally but not exclusively:
business practices: following ethical practices towards customers including maintaining product quality, ethical sources of supply and respecting indigenous peoples
community relations: making charitable donations, employing local people, offering work placement schemes
corporate governance practices: transparency, anti-bribery and corruption codes, adhering to International Labour Organisation (ILO) regulations on labour and child labour
education: providing training and development along with access to education
environmental management: supporting biodiversity, managing their climate change impact and carbon footprint, water conservation, air pollution, and managing waste and recycling, and supporting renewable energy
healthcare: providing affordable healthcare and access to medicine
human rights: supporting basic human rights by adopting the United Nations Universal Declaration of Human Rights
labour relations: promoting health and safety, transparent pay structure, union participation, professional development, employee participation, whistleblower protection
urban regeneration: supporting social/affordable housing.
Engaging for change
We strongly believe that engaging actively with businesses can be a powerful tool for change. Through our research and investment we can develop a constructive dialogue with companies, which provide a platform for discussing any concerns we have. It also gives us the chance to ensure they are maintaining the social responsibility practices that attracted us initially.
We also vote on the corporate governance or ethical issues that come before general meetings - sometimes collaborating with other organisations to exert maximum influence.
We take every opportunity to make sure our voice, and the voice of our investors, is heard.
Integrated in-house financial and socially responsible analysis
Fund Managers work with our in-house team of Socially Responsible Investment Analysts to carry out thematic and stock-specific research, identifying new investment ideas and initiating an on-going dialogue with companies.
It's an integrated system that brings our fund managers ownership of the whole process. They operate with a much deeper knowledge about what their candidate companies are actually doing and so are better equipped to make more considered and careful investment judgements.
Ultimately this offers an added layer of assurance that your money is actually being invested in companies that we know are contributing to a safer, cleaner, better world and that are managed efficiently and correctly.
Independent supervisory panel
All stock buying decisions, policies and processes are subject to the review of an external panel. The Amity Panel reviews and monitors the operations of the funds. Established for over 20 years, it comprises of senior individuals from financial and business backgrounds. Panel members receive all Ecclesiastical's financial and social responsibility research reports. The Amity Panel plays a key role in assessing compliance with our socially responsible criteria. It meets regularly with our Fund Managers with the ultimate power to challenge and reverse decisions if they feel it is necessary.
