EIA Summer Conference 2014 – lively, informative and free for EIA members

Sustainability and engagement were the themes of the day at the Ethical Investment Association Summer Conference. The conference, sponsored by First State Investments and supported by Alquity, was held at the Priory Rooms, Birmingham on Tuesday 17^th June 2014. Speakers from the investment, research and campaigning communities gave the audience presentations on a broad spectrum of ideas and practices that contribute to the world of active management in the broad ‘ethical investment’ sector.

The location for the event reflected the many of the values under discussion. As a Quaker-led, non-profit organisation, the Priory Rooms re-invest profit from their activities to support local community initiatives and broader international projects supporting peace and justice.

Susanna Mattingly from UKSIF updated us on the rebranding of “National Ethical Investment Week” as “Good Money Week”, European SIF (Sustainable Investment and Finance) issues and an EU-wide education programme for financial advisers which will be a valuable development tool for the sector.

The Ethical Investment Research Service (EIRIS) has now been operating for over 30 years and was in the vanguard of the UK ethical investment movement. Carlos Arias-Prieto of EIRIS gave us an insight into current activities of the organisation. Generally associated with negative screening policies, he explained that EIRIS are now actively involved with a wide range of stakeholders in the investment community and asset owners. They provide a range of forward looking services including, positive screening, development of engagement policies and active shareholder voting services. These are bespoke to client requirements and can range from single issue to collaborative activities.

Our hosts for the day, First State Investments, were represented by Will Oulton, Global Head of Responsible Investment. Will provided a clear business perspective as to how and why the issue of sustainability is built into the First State investment style. In doing so, he looked at examples of stock selection and discussed the impressive performance and success in their main emerging markets, Far East and global sectors. A couple of their ethical investment funds have recently been closed to new investors, when their popularity resulted in very strong growth in fund size. He explained how this decision to “soft close” those funds (no new money in, but unrestricted flows out) reflects the firm’s duty of care to existing investors by taking care not to dilute funds with poor stock selections, just to accommodate high inflows of money from new investors. This approach is certainly not the case for all fund houses. First State presented a strong and rational case for sustainability as an important investment consideration and overall, the message was that the First State funds are very much open for business.

A presentation by John Arnold of ECCR (Ecumenical Council for Corporate Responsibility) generated much discussion and activity as John had us working in groups, rating banks on their ethical standards. ECCR have undertaken interesting research into a hot topic – the willingness of banks to change behaviour. The report, available  here, provides interesting findings on this set of issues and reflects engagement at a senior level with six major banking institutions. There is much distance still to be travelled on culture change in the banking sector, and the report is a timely and useful addition to the process.

An important part of the day is always the opportunity for EIA members to network, share ideas and practice and contribute to a wider process of professional development, and there were lively conversations over lunch and coffee breaks. A switch for EIA events was made last year to vegetarian catering for sustainability reasons, and this was timely in the light of the report last week on the incidence of slavery in some fishing and seafood exports to the UK. Another opportunity to share ideas and plan collective action to move the sector forward was the regular ‘EIA member session’.  Members participated in two discussion groups, one on ways in which individual members and the EIA as an organisation can actively engage with platforms on the issues of payment of the Living Wage, tax justice and corporate tax avoidance, and excessive boardroom pay; and the other to hear news on the recent acquisition of Barchester Green by Castlefield Investments, who already own Gaeia, both firms being long-standing EIA members.

The final presentation was a different perspective on sustainable and ethical investment from Alquity. The fund manager has a specialist focus on Africa and recently expanded its fund range to some other developing nations. Suresh Mistry of Alquity explained how broad sustainability considerations are taken into account and how the firm looks at the benefits that will arise in economies from growth of a developing middle class.  However, it recognises that this will only impact on part of society, so integral to the fund is the concept of supporting grassroots projects via charitable donations. Alquity demonstrated this with a video about some of the project work, done through the charity “Afrikids”.

It’s not all hard work at an EIA conference, and some might leave with a little reward. Our day was rounded off by a prize draw and bars of organic chocolate were distributed to the lucky winners. Those with the stamina and no early trains were also able to take advantage of further networking and relaxation courtesy of drinks sponsored by First State after the event.

As usual, a day of valuable and structured CPD, with rich opportunities to share ideas with others active in the sector parties. It was interesting, thought-provoking and fun – see you at the next conference in November/December!

Julian Parrott, Partner, Ethical Futures, writing in a personal capacity