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Ethical funds: tar sands, fur and animal testing?
F&C’s decision to allow firms that deal with tar sands, fur and animal testing into its Stewardship range is criticised by ethical investment advisers.
Companies that profit from tar sands, fur or animal testing are not names you would expect to find on most ethical funds’ shopping lists. But changes to the policies on F&C’s £1.2 billion Stewardship range mean it can now invest in all three.
The move has been met with anger by ethical investment advisers, who have accused the group of backtracking on its principles and poorly communicating the changes to investors.
Lee Coates, founder and director of Ethical Investors, says: ‘Stewardship was the first genuine ethical fund to be launched in the country and the idea that it would change its policy without effective consultation shows it is no longer ethical and no longer what our clients want.
‘I’ve got literature dating back to 1985 [a year after Stewardship was launched] and it was very clear. They could not invest in companies involved in animal testing or fur, but rather than being open and transparent, they have gone back on that and made changes by the back door.’
F&C, like most fund managers, reviews its investment policy regularly, and this is vetted by an independent committee of reference, chaired by Justin Welby, the Anglican dean of Liverpool.
Alexis Krajeski, director of governance and sustainable investment at F&C, insists the provision to enable investment in companies involved in animal testing or the fur trade were not taken lightly.
‘We reviewed our animal welfare policy and revised it in a number of ways,’ she says. ‘We have clarified it and the criteria firms have to meet in terms of animal welfare. This does mean we can now invest in pharmaceuticals, for example, whereas historically it was not clearly defined.
‘Animal welfare is important, and we are not investing in battery chickens. We do not exclude fur, but only if a company’s involvement is negligible or a trivial portion of its sales.’
Krajeski says any changes to F&C’s investment policy are disseminated into the adviser community through its broker sales force, as well being posted on its website and included in Stewardship’s biannual newsletter.
But Coates says the only time he was made aware of the fact that the three Stewardship funds, Growth , Income and International , could invest in fur was when he noticed that Burberry (BRBY.L) was in its top 10.
‘We are one of the leading ethical advisers in the UK and we didn’t hear anything,’ he says. ‘I have a direct holding in the funds in my son’s Child ISA, and have never received the newsletter, and most clients hold it through a platform so wouldn’t get it either.’
He says F&C admitted it had held Burberry for over a year before it made it into Stewardship Growth’s top 10 holdings.
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