Social conscience proves profitable and responsible

By KEVIN TAYLOR

Socially responsible investment funds are still new in Australasia but returns elsewhere show they stack up against more traditional funds.

So says Michael Anderson, AMP-Henderson Global Investors' head of socially responsible funds for Australia.

He was among a group of speakers at a United Nations conference on socially responsible investment (SRI) in Auckland yesterday.

Globally, SRI is becoming big business. In the United States, SRIs comprise about 13 per cent of total investment.

AMP-Henderson globally now has more than $3.5 billion under management in SRIs - but only about $200 million of that is in Australia and New Zealand.

However, the Australian SRI fund is only about 15 months old, and the New Zealand business's SRI retail fund was launched only in August 2000.

It was also the first retail SRI fund started in this country.

The industries that AMP-Henderson's SRI fund steers clear of include alcohol, tobacco, gambling, nuclear energy, defence and pornography.

Instead, the funds manager emphasises environmental, corporate and social responsibility, as well as taking financial performance into account.

Anderson said another measure was the way a business treated its employees - using International Labour Organisation standards as a yardstick.

Other issues considered include a business's greenhouse gas emissions (the less the better) and whether it is a firm involved in genetic engineering.

Anderson said that, from a consumer point of view, GE products did not look like a smart investment.

At the other end of the spectrum, AMP-Henderson looked at backing "industries of the future" such as renewable energy, education, media, information technology, public transport, health care, and water and waste management.

Anderson said the British SRI business had been growing at double the rate of traditional investments every year for the past five or six years.

He said the international evidence showed SRI funds were not "expensive conscience".

Some investors did put their money solely into ethical investments, but historically that had tended to be charities, churches and high-net-worth individuals.

Large superannuation funds had traditionally not been involved, but increasingly they were opting for SRIs.

"The big institutional investors are beginning to buy them," Anderson said.

Yesterday's United Nations Environment Programme conference at the Stamford Plaza Hotel was to address the state and future of socially responsible investment in New Zealand.