|
April 19, 2001
Major UK Fund Manager to Require Environmental Reporting
by Mark Thomsen
Institutional investors are increasingly seeing the need for environmental disclosure.
SocialFunds.com --
Morley Fund Management, a major London-based asset manager, recently announced it would begin
requiring large UK companies to publish environment reports. This development follows on the heels
of last year’s government mandate for pension fund trustees to disclose their policies on socially
responsible investment. The UK could well argue that it has become the world’s leader in advancing
social investing.
 Morley is the asset manager of CGNU plc,
the UK’s largest insurer and the world’s sixth largest insurance group. It manages assets in
excess of £100 billion, over £42 billion of which is invested in UK equities. This is the
equivalent of 2.5% of the UK stock market. With this kind of market influence, Morley’s policy
changes are sure to be felt by a significant number of companies.
The firm believes there
are increasing environmental and social risks associated with companies, and that good corporate
governance protects shareholder value. “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,” explained Keith Jones, Morley’s Managing Director.
The
environmental reports will be required through a new addition to Morley’s corporate governance
policy. Most immediately affected will be FTSE 100 companies. The FTSE 100 is a market
capitalization index of companies on the London Stock Exchange, somewhat analogous to the S&P 500.
Morley expects all FTSE 100 companies, in all sectors, to have practices in place that minimize
company environmental impacts. The firm therefore expects these companies to publish a
comprehensive environmental report.
"Identification of environmental risks and
opportunities is becoming increasingly important for institutional investors,” said Anita Skipper,
Head of Corporate Governance at Morley. “We believe that management ought to be actively
considering steps to report publicly on their key environmental issues.”
Where FTSE 100
companies do not publish such a report, Morley will hold direct dialogues to ascertain management
intentions. If the firm is not satisfied with management’s reasoning, Morley’s new voting policy
dictates it vote against the resolution to adopt the company’s official Report & Accounts.
Regarding FTSE 250 companies in high risk sectors, Morley still expects an environmental
report. However, when such a report is not produced, Morley plans to abstain on the resolution to
adopt the Report & Accounts. The firm plans to review this policy each year and anticipates it
will take a harder stance over time, eventually applying FTSE 100 company requirements to FTSE 250
companies as well.
Voting against the Report and Accounts will raise awareness with
company boards, but it does not mean Morley will not invest in companies that do not publish an
environmental report. Morley says it prefers to engage companies in constant dialogue and persuade
management that good social and environmental practices add value.
Eventually, Morley will
apply the new corporate governance policy to its global investments, although a time frame has not
yet been established. Britain may be getting poised to exert its influence around the world yet
again, this time through the unlikely venue of socially responsible investing.
©
SRI World Group, Inc. All Rights Reserved.
Top
| 
