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Socially Responsible
Investment
Agenda
 Adding shareholder value using sustainable development
 Focusing investments
 Developing appropriate retail and institutional products
 Engagement
Page 2
Sustainable Development
“Development that meets the needs of the present without compromising
the ability of future generations to meet their own needs”
- Bruntland Commission 1987
Page 3
Why Sustainable Development?
 World Economic Growth continues, UK GDP/capita doubles (1950 - 2000)
OECD Economic Output (Real 1995 US$)
2.50E+07
2.00E+07
US$
1.50E+07
1.00E+07
5.00E+06
Q1 00
Q3 97
Q4 98
Q2 96
Q1 95
Q4 93
Q3 92
Q2 91
Q1 90
Q3 87
Q4 88
Q2 86
Q1 85
Q4 83
Q3 82
Q2 81
Q1 80
Q4 78
Q2 76
Q3 77
Q1 75
Q4 73
Q3 72
Q2 71
Q1 70
Q4 68
Q3 67
Q1 65
Q2 66
Q4 63
Q3 62
Q2 61
Q1 60
0.00E+00
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Environmental Costs
 Pollution
 Resource depletion
 Climate change
 Biodiversity
 Ozone destruction
 Deforestation, flooding
 Acid rain
 Fisheries on brink
 Toxic pollutants
 Freshwater shortages
 Fresh water pollution
 Topsoil losses
 Radio-active wastes
Page 5
Climate Change
 Severe weather, and more to come…
 Impacts
- insurance - ‘exceptional’ losses,
- electricity generation
- agriculture
- energy industries
 Solutions: renewable energies, fuel cells,
energy efficiency, rail transport...
Searching for sustainable investment solutions
Page 6
Endocrine Disrupters
 Exposure to a cocktail of chemicals
 Disturbing evidence: early puberty in girls, low sperm counts, gender distortion in
wildlife
 Industries at risk: chemicals, consumer products, retailers and insurance
 Friends of the Earth campaign- Boots a key target
Page 7
Social Costs
 Inequality
 Regional conflicts increasing
 Diseases reappearing (TB, Malaria, Aids)
 Diseases of the developed world: Obesity, Heart Disease, Depression
Page 8
Index of Sustainable Economic Welfare
Page 9
Five World Economy
Linear Economy
Fossil Fuels,
Nuclear
Energy
DEPLETION
Rich Ore Deposits,
Ancient Forests,
Oil Reserves etc..
CO2, Nox,
SOx
POLLUTION
Materials
Heavy metals
Carcinogens,
EDCs
Products and Services
OVER CONSUMPTION
Page 10
One World Economy
Cycling Economy
Renewable
Sources
Sustainably
Managed
Resources
Energy
Materials
Wastes
Bio-degradable
wastes
Quality of Life Enhancers
Page 11
Sustainable Development
 Key driver to investment performance
Economy
Society
Environment
 “As investors, we increasingly believe that good environmental and social practice is
synonymous with good management of companies and, in turn, good share price
performance.”
 - Keith Jones, Managing Director of Morley
Page 13
Appraisal Process
 Profile each company to:
 identify environmental and social opportunities & risk
 judge suitability of a company for the SRI funds
 highlight areas suitable for progressive engagement
 Judge suitability of a company based on grading system surrounding 2 key elements:
 Business sustainability
 Management vision and strategy
Page 16
Product
How We Rate Companies - Sustainability Matrix
A
X
B
X
C
X
X
D
X
X
X
X
X
E
X
X
X
X
X
1
2
3
4
5
Management Vision and Practice
Business Sustainability grading:
Management Vision & Strategy Grading:
A:
1: Excellent - clear vision of sustainable development
and actively working to
achieve it
……..
core business is sustainability
solution
……..
E:
business is fundamentally in conflict with sustainable
development
5: Poor - company is hostile to the concept of
corporate social responsibility
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Engagement
Good social and environmental practice

Good business practice

Good financial performance
Page 18
Paying the Price of Poor Practice
 Compensation claims
 Damage to reputation
 82% drop in share price
Page 19
Summary
 SRI must add shareholder value to succeed
 Traditional negative screening simply restricts where you invest
 Corporate Governance and engagement are an extension SRI.
Page 20