SRI Consultants Ltd T/A sriServices
SRI Services
To support and encourage the growth of retail sustainable, responsible and ethical investment in the UK.
ID: 864621228245-08
Lobbying Activity
Response to Institutional investors' and asset managers' duties regarding sustainability
20 Jun 2018
SRI Services is devoted to advancing retail (individual investor) Sustainable and Responsible Investment (SRI). This includes offering a free online fund tool www.FundEcoMarket.co.uk designed to help financial services intermediaries meet their clients SRI/ESG needs. SRI Services is run by Julia Dreblow who has specialised in this area for 25 years.
We welcome these changes and agree all investors must be able to reflect their personal values and invest in ways that support progress in areas like climate change, the SDGs and the transition to a circular economy. We agree this must be integral to the advice process. Our work proves this is possible - and welcomed by clients. Our fund tool also shows this can be simplified.
However the proposed definitions are a major concern. The language is variously too niche, too restrictive, potentially misleading, likely to be off putting to compliance professionals and unworkable at scale. (Particularly the use of the term ‘Social Investment’).
The text does not reflect the diversity and dynamism of today’s ESG/SRI fund strategies - and how they meet different financial goals. The many different combinations on Fund EcoMarket’s c400 funds show this -few of which may meet your definitions.
Labels change over time as new issues and ideas emerge. The label SRI is probably better suited to your intended universe than ESG as it includes negative screening (eg avoiding coal/oil/gas producers), positive and thematic approaches (eg investment in solutions companies), ESG (aiming to reduce ESG risks), impact investment (typically individual investments, but sometimes funds, that target social outcomes) and stewardship (eg voting and engagement).
To advance sustainable finance all such strategies should be included – alongside relevant single issue funds (eg climate risk). This will enable funds to be responsive to clients’ diverse and changing (financial and ESG/SRI) needs. To do otherwise would stifle necessary innovation and probably create market bubbles.
Guarding against ‘greenwash’ is important, however being overly prescriptive could be equally damaging. To be successful investment company literature must be clear and appropriate - fair and not misleading. See text published by ourselves the PRI, HLEG and TCFD.
Although we believe this amendment should use the term SRI – amending the definitions in Point 1, in Article 2 Sections 7 – 11 would also be suitable:
7: “ESG Preferences means a client or potential client’s desire to consider environmental, social and/or governance issues and additional related considerations as part of their investment strategy”.
8: “ESG Considerations means the explicit, and significant integration of environmental, social and/ or governance factors into investment selection, retention and/or realisation processes, policies and practices. Relevant strategies may include but are not restricted to positive selection, avoidance criteria and responsible investor stewardship. Objectives may include financial, risk and/or impact aims.”
9: “Environmental investment means a strategy that explicitly and significantly considers environmental and sustainability issues and reflects this through policies and practices. Relevant strategies may include but are not restricted to climate change, resource management, energy, transport and sustainability”.
10: “Social investment means an investment that explicitly and significantly considers social issues and reflects this through policies and practices. Relevant issues may include, but are not restricted to; human rights, labour standards, child labour, equal opportunities, health and wellbeing.”
11: “Governance means investment strategies that explicitly and significantly consider governance issues and reflects this through policies and practices. Relevant issues may include, but are not restricted to; board structure, company management, executive remuneration, tax, bribery and corruption.
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