David Palmer | Interview


The charity sector does seem to be chang- ing and there seems to be more demand for these types of vehicles. We need to rec- ognise that and bring them into our portfolio.


How is the charity sector changing? There has been much more awareness of the whole risk-targeted world in the past five years. A lot of investment consultants are now looking at risk-targeted rather than return-targeted approaches and that is seeping over to the charity sector. It is not a strong influence yet, but it is starting to gain some momentum.


How much scrutiny do you put your investments under due to your ethical stance?


This is where we are hopefully strongest. When we do the due diligence question- naire for a large charity we always come out strongly on the ethical analysis. You can go to our website and ask us what our ethics on a particular issue? How did you come to that conclusion? You may not agree with it, but at least you have transparency. Why did they make that decision? Why did they invest here and not there? So our well-argued, theological- based approach is set out in black and white. So, on the ethical side we always come out strongly.


Where we have had challenges on the due diligence questionnaires is on our cover- age, our investment proposition. We have had a hole in our global equities. We had one equity fund, which was predominately UK with some global. So that was a hole that we are going to fill with our new fund launch in two months’ time.


What processes do you go through to ensure that you do not repeat the mistake of the Church of England investing in Amazon?


I have a theory on Justin Welby. He knew exactly what he was saying when he criti- cised Amazon. It is the world’s largest online retailer and it is deeply flawed. They manage their tax very efficiently and have a lot of low-paid staff. How do we as ethical


investors bring about change at Amazon? It is hard. Voting at an AGM is not going to bring about change. Saying something in the press that may cause you personal embar- rassment, but gets all of that press coverage and after a cou- ple of weeks Amazon said it is going to change its policy on how much it pays the people working on warehouses. That speech from Justin Welby caused him huge embarrass- ment, but it did, arguably, get Amazon to think about what they pay their staff. Isn’t that what Christian’s are supposed to do? Not put yourself first. For investors to bring about change is incremental, it is hard work. You are not going to see an over-night solution. It is getting CEOs to think about what they are


Epworth Investment Management


Founded: 1996 (parent company founded in 1960)


Assets under management: £1.2bn Style: Christian ethical Funds: Cash, equities and bonds Chief executive officer: David Palmer Chief investment officer: Stephen Beer


that we as faith groups adhere to. We will supplement that by filing motions. The Church of England is a co-filer on the BP motions that are coming up. Just having our names on the final resolu- tion creates some interest. There might be a story in the press about it. It is not about how many shares we own, it is about the


Voting at an AGM is not going to bring about change.


doing. Is it the right thing to do? What Justin Welby did was highlight a fun- damental issue and, in a small way, he brought about some change. Well done, Justin.


So engagement is a big part of your strategy?


It is huge. We are part of the Church Inves- tors Group, which is a collaborative group between the faiths and investors in the UK. We even have people from overseas as part of that group.


There is a voting template that has been agreed by the group, so when we vote in AGMs we have rules on how many women should be on a board or the ratio of a CEOs bonus to their salary? If it is more than 10 times we will vote against the remunera- tion policy. It is a hard-coded voting policy


voice that we have. We are privileged as faith groups to have that voice and we will use it where we can.


You wrote to Ted Baker about its CEO’s behaviour. What response did you get? A nice letter back that said: “Thank you for your letter. We understand your concerns and we are looking into it”. We never get: “We will dismiss the guy and change our policy.” Every time we get an acknowledgment of our letters, whether it gives us something we want or not, it is signed by the CEO. He probably has not written it, but he has signed it. So he has read it, spent 30 seconds or a minute rec- ognising that there is an issue. I am not naive enough to think that a letter from us is going to lead to a CEO spending two-hours writing a reply. He has an inves-


Issue 82 | March 2019 | portfolio institutional | 21


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