Bringing sustainability, ethics and investment together - with

Bringing sustainability, ethics and investment together - with

Bringing sustainability, ethics and investment together - with the help of Fund EcoMarket CISI members - Wales Julia Dreblow BA Hons, Dip PFS 26 January 2017 For information only. sriServices is not authorised to offer advice. This presentation is for use by UK financial services professionals only. Registered company - SRI Consultants Ltd, 03904843 Introduction Who? 25 years in FS - previously Friends Provident, UKSIF Director/project chair, NPI Highly Commended - Corporation of London Sustainable City Awards 2015 (SF), finalist 2016. Shortlisted for two Investment Week

SRI awards 2016 What? Online adviser friendly tools & support Consultancy & partnerships Why? Help match clients aims, opinions & lifestyles to investment choices Grow SRI & direct more investment to better companies An advice gap Institutional market size eg

UNPRI $60tn Impact investment c$35bn 2015 (GIIN) High profile campaigns gaining ground (eg Divestment) Markets demonstrate business case eg institutional research ESG risks & opportunities ... Estimates vary UK retail funds c1-2% of sales (c15bn EIRIS 2015 highest ever) A changing world Eg. Law Commission review DC schemes & social investment reporting May 2017 Growing interest/concerns, risks & opportunities. Knock on effect of the political climate.

Hardening opinions? Strengthening resolve? Stranded assets and related climate risks/opps? COP 21 and beyond - Investing to keep temperature rise <2c Coming soon?: Climate Investment Plans (based on INDCs Intended Nationally Determined Contributions) Eyjafjallajkull glacier, Iceland, 12/16, now 75m higher at base than 3 years ago Diverse, dynamic & high profile issues The diversity of issues makes this area complex to advise on... Ethical Social Environmental Governance

Tesco accounting issues (UK 2014) Rana Plaza disaster (Bangladesh 2013) BP Deepwater Horizon (Gulf of Mexico 2010) . VW governance issues (Germany 2015), Growing water scarcity Different approaches Funds approach issues in different ways... Support Avoid Engage

Stranded Assets risk & the Bank of England (2015) comments. UN Global Development Goals (2015), Divest go fossil free campaign, Tesla Matching needs to options Plot issues, approaches, aims & financials? The result? Made simpler with SRI Styles segments: Highlights diversity, focuses on core commonalities where options are ethically similar Simplifies identification of ethically relevant fund options (see StyleFinder fact find) Helps advisers match what a client wants to what funds do Noting:

Variation within styles Crossover between styles Clients may need a deeper dive Regulated retail funds and fund managers only ESG Integration Responsible Ownership Sustainability Theme Ethically Balanced Negative Ethical Environmental Theme Social Theme Faith Based SRI Styles in numbers: Why ethical / not ethical fails.

Total: 349 entries All regulated, retail onshore funds plus additional corporate entries 75 OEICs/UTs 21 Corporate Activity Styles breakdown of all funds opposite OEIC options include: 7 UK 8 22 Global 10 Fixed Interest 12 Mixed Asset 4 Income Negative Ethical (87) Ethically

Balanced (89) Sustainability Themed (71) Environmental Themed (48) Faith Based (5) Social Themed (4) Responsible Ownership (16) Source: Fund EcoMarket October 2016 Fund EcoMarket survey responses Policies Corporate Features Publish Full Voting Report

15 Balances Pros & Cons / 22 Best in Sector Integrates ESG into all/most fund research 33 34 > 50% Large Cap 10 Reviewing carbon/fossil fuel exposure for all funds 15 Coal, Oil & Gas Majors

excluded 30 RSMR Rated 29 In house voting expertise 16 Animal Welfare policy 33 Faith Friendly 10 Responsible ownership / ESG a 16 key differentiator

Social policy 33 Positive Selection Bias 35 UK Stewardship Code Signatory 17 Sustainability policy 46 Eurosif Transparency 25 Measures Positive Impacts 16

Norms Focus 10 Vote all shares at AGMs & EGMs ALL OF THE ABOVE Avoids Tobacco 38 Limited Exclusion policy Avoids Armaments Manufacture 40 Climate Change / GHG policy

15 12 0 Example advice process Identify interested clients Are you interested in ethical, social, environmental or faith related issues? Identify key areas of interest eg - major issues, approaches or SRI styles Refine SRI research (if required) eg specific issues, attitudes, other factors Record your findings eg - for reference, compliance & audit trail

Integrate this into regular processes eg products, % portfolio, reviews Fact Finding options An advisers view... I think that your site is the missing link for many IFAs who are nervous/anxious about raising ethical investing with their clients. It gives them a process and an audit trail and I suspect many of those advisers who dont raise ethical investing with their clients dont raise the issue because they have no process in place if the client was to say that they did want to invest ethically. This is what happened to me,

and it was only because I wanted to offer ethical investing to my clients that I discovered your site through my own research. Fund EcoMarket overview Designed to help open up regular investor retail ethical / SRI opportunities by being:

Ethical/SRI information only Whole of (retail) market Reliable & comprehensive Focused on key areas / challenges Advice process driven Open to all, free to use Independent Unique Other benefits Helps build reputation & trust Variety of uses eg research, advice & training Compliments existing tools What to look out for in 2017 Five i s Intentions (of fund/ fund manager) Impact (of strategy)

Integration (of ESG factors ... aims & credibility vary) Insurers (can strategies remain so different?) Interconnectivity (investment & lifestyle) Next steps bringing SRI into your business: How can this area enhance your clients experience? eg more client-centric advice, reflect different values, aims and interests (charities, parents) How can this area benefit your business? Younger clients, new recruits, paraplanners, review changing opinions, reputation, trust ... Adviser ISO 22222 What changes do you need to make for this to be a success for you?

Initial & supplementary fact finding, research, reporting Does 1% sound right to you? Thank you... attendees & partners Any questions? Contact: E: [email protected] M: 07702 563702 Twitter: @JuliaDreblow

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