News round-up (Dec/Jan)

January 01, 2005

No ethics please

Flying in the face of growing consumer interest, independent financial advisors who ask clients whether they wish ethical, social or environmental issues to be taken into account in their investments are still a rarity, a new survey has revealed. UKSIF interviewed 35 IFAs and found that only 18 ask about ‘ethical concerns’ in their standard client fact find, none of whom actually include the words social, environmental or religious in their phrasing. The findings are unsurprising since 70% of IFAs do not provide training for advisors on ethical and socially responsible investment. UKSIF is thus offering free training to advisers to help them take advantage of the benefits of socially responsible investment. Contact Helen Barnes, UKSIF 020 7405 0040

The matrix reloaded

Most companies now disclose information on how they manage social and environmental issues and are better at understanding how these issues can affect their business, Morley Fund Management’s third annual Sustainability Matrix indicates. The matrix rates companies in five sectors according to social and environmental risks, liabilities and opportunities identified by Morley’s analysts. The index also reveals regional differences – while European companies are strong on environmental management, UK companies have higher standards of corporate governance. Company products are rated from A to E, and management practices from 1 to 5. Morley has included the Eurotop 50 in its ratings for the first time this year, to allow for cross-border comparison of companies. Contact Beth Saint, Morley FM 020 7809 8125

Profiting from poverty

A report published by ten leading charities including WWF, Amnesty International and Friends of the Earth, examines the impacts of the European finance sector on the environment, human rights and development. A Big Deal? Corporate Social Responsibility and the Finance Sector in Europe, accuses European banks and financial institutions of benefiting from corruption, profiting from poverty and social exclusion, as well as contributing to human rights abuses and environmental degradation. The report presents seven case studies that suggest that the finance sector is unlikely to embed corporate responsibility on a voluntary basis. For example, the report alleges that the finance sector “is a primary conduit for bribery and corruption providing billion of dollars in loans to repressive governments.” Contact Deborah Doane, Corporate Responsibility Coalition 077 8655 6251

Microfinance gains momentum

Deutsche Bank has spearheaded the creation of the Global Commercial Microfinance Consortium, a $75m multilateral fund to provide finance to microfinance institutions around the world. The UK’s Department for International Development is to provide 10% of the $15m equity, while the US Agency for International Development has guaranteed a quarter of the $60m debt. Other partners include Merrill Lynch and Munich Re, along with SRI practitioners such as Calvert Social Investment Foundation and Storebrand. The fund is unique in drawing together a combination of commercial, social and government investors. Contact Rohini Pragasam Deutsche Bank 00 1 212 250 4615

Editorial Comment

Micro finance is truly coming of age. It’s best known advocate is the Grameen Bank of Bangladesh, started in 1976 by Dr Muhammad Yunus, who found that poor women could break out of poverty by taking tiny loans to start or expand micro businesses. Today, many of the mainstream names like Deutsche Bank and Citigroup are firmly involved on an economically sustainable – not philanthropic – basis. The key for them is working with trusted intermediaries who can get close to the so-called ‘bottom of the pyramid’ through a cost-effective product distribution mechanism.There are lessons here for other sectors, especially basic consumer goods. CK Prahalad’s The Fortune at the Bottom of the Pyramid has become required reading both for CSR professionals and for canny business development directors as they eye up the market potential among the three billion who survive on less than two dollars a day. Some firms are reformulating products and reducing package size to get the entry-level cost down. But production is only a part of the whole value chain. The bigger issue, as micro finance has found, is how to strip costs from the distribution process. Here partnership mechanisms are the key to sustainable market-based solutions for the so-called ‘poorest of the poor’.

Corporate Citizenship Briefing, issue no: 85 – January, 2006