Interview | David Palmer
tor relations body for that, but he has had to sign it and think about it and that is a success for us. [Ted Baker’s CEO, Ray Kel- vin, has since left the business following several allegations, which included forced hugging with his staff].
I was surprised to find that you invest in oil and gas companies. Why is that? As you will be aware, this is a strategy which has been challenged by some in the ethical community.
Our governing body meets once a year and they challenged us consider our oil and gas exposure. Is it compatible with the Paris Accord [to keep global temperature rises
mittee in a year next June. Will it lead to disinvestment? I cannot tell you. We are on that journey.
It is a huge piece of work that we are cur- rently undertaking.
It is a critical issue, particularly for Chris- tians, because of the harm that is being done to God’s kingdom.
There was a report a few months back that said only 1.3% of oil company cap-ex is being spent on cleaner sources of energy. It doesn’t seem a lot.
It is not enough. They have to replace their oil reserves. If they have a long-term future then they have to move away from oil and
as investment funds. So it brings the robustness of the FCA to charity invest- ment vehicles.
Will it make a difference investment portfolio? No. It will give investors greater comfort. It has been a long time coming and has been welcomed by industry.
That speech from Justin Welby caused
him huge embarrassment, but it did, arguably, get Amazon to think about what they pay their staff.
below 2 degrees Celsius]? We are doing a process, the Church of Eng- land is doing it as well, that looks at the oil and gas companies in which we invest to see if their cap-ex plans meet the demands of the Paris Accord. It’s a difficult question because we are talk- ing 30 to 40 years hence. We are talking about a change in their reserves in that time to meet the Paris Accord. So we send a lot of time agreeing a topic model. We are now assessing those companies against that model to see if they meet them or not. Is it compatible with what they are doing with the Paris accord? What is their transi- tion policy? How much of cap-ex will be spent on new reserves? We are putting those companies through five key tests and a traffic light system against those five tests. We will report the outcomes to the com-
22 | portfolio institutional | March 2019 | issue 82
gas. Shell is perhaps the best at doing that. This is part of our engagement. At what point are you going to have alternative sources of revenue than just oil and gas because at some point that is not going to be enough.
In April, Charity Authorised Investment Funds are being introduced. You are launching them, so what will the benefit be? This is a new structure that had a lot of consultation around the industry. The previous structure was called Common Investment Funds and was authorised by the Charity Commission, which has done a sterling job but does not have the invest- ment depth to oversee regulated funds. Now there is a form of duel regulation. The Charity Commission approve them as charities and then the FCA approve them
Investing in companies that behave responsibly is all the rage at the moment, but you have been doing it since you started. Are you trailblazers in this area? This is a boast that I cannot back up with facts, but from the research I did when I joined here, we were the first ethical com- mittee in the UK. Back in 1974, the Central Finance Board was told that the church did not like what was happening in South Africa and was asked if it could find out if any of its investments were dealing with apartheid South Africa. Companies were then excluded on that basis. We also filed a resolution with Midland Bank calling on it not to lend money to South African-based institutions. It is the first example that I can find of an overt eth- ical investment committee. Our first CEO – Charles Jacob – had the idea of the first ethical unit trust. He tried to get them launched in the UK and the Department of Trade and Industry called them Brazil funds, because they were a nuts idea. So he didn’t get them launched here, but he did get them launched at Friends Provi- dent, where they became stewardship funds which are now known as ethical investment unit trustees in the UK. The concept came from Charles Jacob, so we have a long history of ethical investing.
Is ethical investing mainstream? It is mainstream. Retail and institutional investors are demanding an ethical overlay and the extent to which they want the eth- ics. Some will say that it impairs perfor- mance, which arguably it doesn’t have to. If you are an investment manager or a trustee you need to think about the ethics of your investments.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44
