UNEP Supports Responsible InvestmentTuesday, 21 Jul 2009 by lee | 0 Comments
Good News for Responsible Investors
In a recent United Nations Environment Programmge Report, fund managers have been warned that they may face legal action if they do not take social, environmental or Governance issues into account when making investment decisions.
At Ethical Investors we have spent the last 20 years arguing that investment companies have a moral obligation to invest responsibly, but it now seems that the responsibility may well be a legal one as well. This is great news, as the financial system has for too long hidden its activities behind a veil of secrecy. There is nothing transparent about the investment process, despite the fund managers superficially providing information about where they invest. The problem isn't so much about lack of information, it is about lack of education. The average investor doesn't understand the investment process, so providing them with lists of stocks and a set of accounts every 6 months is no help to anyone. Sure it looks transparent, but it is really rather pointless.
Public ignorance of the link between social and environmental destruction and their money is incredibly low, so the onus should be on the investment community to end this ignorance. However, the saying "ignorance is bliss" has a strong impact when it comes to investment. This bliss is not that of the investors, but of the investment companies; they know that they can get away with 'murder' as long as the public hasn't a clue about what is done in their name. Financial advisers are no help at all, as the vast majority refuse to ask their clients about whether they want to take any social, ethical, environmental or faith (SEEF) issues into account when investing, thus perpetuating the ignorance.
Fund Managers often claim that there is no interest in responsible investment from the majority of the public, so they won't make their mainstream funds responsible. How on earth can the average person ask about investing responsibly if they don't understand the way investment works and have no idea that their money will be invested irresponsibly unless they ask for it. Catch 22 in favour of the investment companies!
Hey, here's a really radical suggestion; why don't investment companies invest ALL money is a reponsible way as the default option, and be 100% transparent about this and the options availble? Those individuals that wish to invest irresponsibly can choose to do so in separate funds and everyone will understand exaclty what they are getting.
Oh look, a flying pig....................
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