‘We avoid gov­ern­ments be­cause they fi­nance war’

The Daily Telegraph - Your Money - - FRONT PAGE -

As in­ter­est in eth­i­cal and sus­tain­able funds con­tin­ues to grow, some com­pa­nies are ac­cused of “green­wash­ing”, or pre­tend­ing they are more eth­i­cal than they ac­tu­ally are. How can in­vestors dis­tin­guish the truly green?

Rath­bone Eth­i­cal Bond fund man­ager Bryn Jones and deputy Noelle Caza­lis tell Tele­graph Money how they ap­ply strict rules when judg­ing whether a com­pany is eth­i­cal and why they won’t in­vest in govern­ment bonds.

Bryn Jones:

Our fund is at the high­yield­ing end of in­vest­ment-grade funds. This is for peo­ple who are look­ing for in­come.

We have an eth­i­cal man­date, but we’re not just tar­get­ing this type of in­vestor. Eth­i­cal in­vestors are keen to find ways they can pro­tect the en­vi­ron­ment or do some­thing more to bet­ter so­ci­ety at the same time as mak­ing money. But re­cently we have started to at­tract more tra­di­tional in­vestors, be­cause we have been out­per­form­ing those funds that don’t have an eth­i­cal man­date.

Bryn Jones and Noelle Caza­lis of Rath­bones tell Adam Wil­liams how to find a truly eth­i­cal in­vest­ment

Noelle Caza­lis:

We have ex­clu­sions such as oil, gas, gam­bling, preda­tory lend­ing, tobacco or ar­ma­ment. That means we can­not in­vest in govern­ment gilts, be­cause this money is then used to fi­nance de­fence pro­grammes.

But we don’t just do ex­clu­sions; any in­vest­ment that goes into the fund must also have some eth­i­cal pos­i­tives. That could be em­ploy­ment poli­cies, green cre­den­tials or strong cor­po­rate so­cial re­spon­si­bil­ity.

Each in­vestor has a dif­fer­ent def­i­ni­tion of eth­i­cal. So what our fund does is fol­low a strict man­date. If a com­pany has one neg­a­tive, it is ex­cluded from the fund. We feel this is the best way to get what we think is an eth­i­cal re­turn.

BJ: CV: Bryn Jones and Noelle Caza­lis

Bryn Jones joined Rath­bones from Mer­rill l Lynch in 2004 to run the e Eth­i­cal l Bond fund. Noelle Caza­lis, s, who previously worked at Bank of France in Paris, be­came deputy man­ager in Jan­uary 2016.

NC:

A re­cent ex­am­ple is Unilever, which is ex­cluded from our fund be­cause of an­i­mal test­ing. It re­cently is­sued a “green bond”, to im­prove the en­ergy ef­fi­ciency of its fac­to­ries, but we took the view that be­cause of the an­i­mal test­ing it still should be ex­cluded. The green bond didn’t mit­i­gate the fact it was still an­i­mal test­ing.

This has been suc­cess­ful for us. We didn’t hold BP or Volk­swa­gen, and avoid­ing th­ese com­pa­nies means we’ve not had to deal with their poor gov­er­nance or en­vi­ron­men­tal dam­age.

BJ: BJ:

This is oc­cur­ring a lot. The de­mand for sus­tain­able in­vest­ing is go­ing up, and in or­der to com­pete in that sphere com­pa­nies are green­wash­ing. Some green funds are do­ing the same. I would tell in­vestors to look un­der the bon­net at what they’re re­ally in­vest­ing in.

NC:

Banks and in­sur­ers have per­formed well for us re­cently. We think that after the crisis fun­da­men­tals have im­proved. Char­ity bonds and so­cial hous­ing bonds have also been prom­i­nent in the fund. As for f fail­ures, Peter­bor­ough hos­pi­tal was fi­nanced through a bond. W We held that bond but then there w was some neg­a­tive news com­ing from the NHS trust, and we viewed this as risk. We de­cided to cut o our losses, and ul­ti­mately it w was one we sold too quickly. But when we lose con­vic­tion

www.tele­graph.co.uk/funds

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