NEST Corporation has chosen EIRIS as the successful bidder for a contract to provide data on a broad range of environmental, social and governance (ESG) issues.

EIRIS has almost 30 years’ experience of providing global research on responsible investment issues and has worked with some of the world’s largest asset owners to help them identify manage ESG risk.

NEST, the UK National Employment Savings Trust, is a new easy to use pension scheme that any UK employer can use to meet the new workplace pensions duties that start in 2012.

NEST will use data from EIRIS to analyse the potential ESG risks presented in the variety of assets it owns, to check that firms are being well-managed and to understand how they are shaping the societies and environments they influence. NEST will also use EIRIS data to monitor its fund managers and to inform NEST’s voting and engagement activities.

NEST Chief Investment Officer Mark Fawcett said ‘NEST aspires to a world class responsible investment approach. We firmly believe that environmental, social and governance issues should be factored into investment processes in order to act in the best financial interests of our members. Our research points to responsible investment providing long-term value, reducing risk and contributing towards better member outcomes”.

“As part of our commitment to being a responsible owner and investor, NEST will exercise its voting rights in an informed manner via its fund managers and actively engage with its investee companies to meet and exceed standards of good practice as set out in the FRC’s Stewardship Code and the United Nations-backed Principles for Responsible Investment”.

Peter Webster, EIRIS’ Executive Director said “We are delighted to be working with NEST to help them gain a more complete understanding of ESG investment risk and performance as part of a long-term investment approach. This announcement comes at an exciting time for us as we work to expand the range of products and services we offer to asset owners”.

Consideration of ESG issues is on the rise and a growing number asset owners are adopting responsible investment practices. The United Nations-backed Principles for Responsible Investment (PRI) now has more than 900 signatories representing approximately USD 30 trillion of assets under management.

Click here to read NEST's statement on the appointment of EIRIS as ESG research provider.

Mexico launches sustainability index with EIRIS research

8 December 2011

Bolsa Mexicana de Valores (BMV), the Mexican stock exchange, today announces the full launch of its sustainability index.

BMV's new sustainability index is based on the 70 most liquid shares on the Mexican Stock Exchange. Companies eligible for inclusion on the index are assessed according to their performance, impact and responses to emerging environmental, social and governance (ESG) issues. These include climate change, human rights and policies and systems to counter bribery.

BMV selected EIRIS, and its local research partner in Mexico, Ecovalores, as lead partners to develop the methodology and assessment framework behind the new sustainability index. EIRIS and Ecovalores also undertake research on behalf of BMV to evaluate the ESG performance of Mexican companies and to determine which of them meet the sustainability requirements to list on the index.

BMV is the second-largest exchange in Latin America after that of Brazil, with a total value of stocks of more than $450bn.

To meet the listing requirements for the sustainability index, each company is evaluated in comparison to the sustainability practices of its sector globally. Mexican companies have to score in the top 50% of performers to be eligible for inclusion.

Peter Webster, Executive Director at EIRIS said: "Stock exchanges around the world - particularly those in emerging markets - are embracing the view that they have a key role to play in promoting sustainability and greater disclosure by their listed companies. We are delighted to be working with BMV as part our wider work with stock exchanges around the world".

Luisa Montes, Director at Ecovalores, said "We welcome BMV's new sustainability index and the leading role the index will play in enhancing corporate performance on ESG issues and encouraging responsible long-term approaches to investment in Mexico".

Click here to download a pdf copy of this news release.

South African companies switched on to climate change - but challenges remain

6 December 2011

(London/Johannesburg). As delegates from around the world gather this week in South Africa for the COP17 UN climate talks, EIRIS' latest report explores the extent to which companies in the region are on track to tackle climate change.

With the Kyoto emission targets running out next year, the South African government has openly recognised the need for an urgent response to climate change which threatens economic growth, sustainable development, agricultural production, food security and commodity prices.

Last week, the country's environment minister Edna Molewa, pointed out that in Africa alone 70 million people and nearly a third of the continent's coastal infrastructure could be flooded if global warming raises sea levels by 1 metre by 2080 as some scientists predict.

Commissioned by the Johannesburg Stock Exchange (JSE), EIRIS' latest report assesses the climate change performance of the 'Top 40' largest companies (by market capitalisation) listed on the JSE. Encouragingly, our research finds that 73% of these companies are demonstrating a 'good' overall response to the various climate change risks they face. However, many are failing to take on the extra initiatives they need to fully tackle the issue.

Key research findings:

Risk management 73% of JSE Top 40 companies demonstrate a good overall risk response to climate change
Targets 60% of JSE Top 40 companies have set short-term greenhouse gas (GHG) emissions targets, but only 23% have set long-term targets, leaving considerable room for improvement
Disclosure 95% of the JSE Top 40 are disclosing absolute CO2 emissions and 85% are disclosing normalised emissions
Emission reductions 30% of companies have reduced CO2 emissions over the last few years
Remuneration 35% of companies have linked performance on climate change to board/senior management level remuneration
Leading sectors Mining and banks sectors - the two largest sectors amongst the JSE Top 40 - demonstrate a high quality response to climate change overall

Valeh Tehranchi, Research Analyst at EIRIS and report author, said "It's great to see South African companies making progress, but they must do more to reduce their own impacts and to plan for how they will operate in a world that has been altered by climate change. Linking remuneration to climate change mitigation targets, establishing long-term GHG emissions reduction targets and quantifying climate change risks are areas where there is the biggest scope for improvement amongst JSE companies".

Corli le Roux, Legal Counsel and Head of SRI Index at the JSE, said "We are truly encouraged by the commitments we are seeing from our companies. Plenty of scope remains for engagement, as failure to address climate change could damage reputations and profitability as more significance is given to climate change by investors and other key stakeholders. We look forward to continuing this journey towards achieving the changes which may impact the very survival of our species and the planet".

Click here to download a copy of the report.

UK ethical investment hits record £11.3Bn high

6 October 2011

Figures released today by EIRIS, the non-profit sustainable investment research firm, show that the amount of money invested in Britain's green and ethical retail funds (i.e. those funds open to the general public) has reached a record high of £11.3Bn.

Launched in the run up to the UK's third National Ethical Investment Week (16 -22 October 2011), the latest figure of £11.3 billion* represents over three quarters of a million investors in green and ethical funds, up from around 250,000 investors in 2001 when £4 billion was invested ethically in the UK. Statistics from the Investment Management Association show that gross retail sales into UK Ethical funds were up by 25% in quarter two of 2011 compared with the same quarter in 2010.

Growing demand

Increased interest in ethical finance is backed up by the findings of EIRIS' latest Ipsos MORI national consumer survey which explores consumer attitudes to ethical finance in Great Britain. The poll surveyed 1,030 adults and finds that 38% of the British public with a financial product or service are interested in green or ethical financial products and services with more women than men (41% versus 34%) expressing an interest. Of those interested, 90% said they would be likely to switch to a different provider if it offered green or ethical investment products.

The poll also explores the extent to which consumers feel that many of the sustainability themes which green and ethical investment funds seek to address will impact upon the global economy. When asked 'What impact, if any, do you think each of the following will have on the global economy in the next 10 years':

61% of respondents said natural resource scarcity will have a negative impact on the global economy;
59% said growing population will have a negative impact;
57% said availability of global food supplies will have a negative impact;
56% said environmental damage will have a negative impact;
56% said ageing population will have a negative impact;
52% said water scarcity will have a negative impact;
49% said climate change will have a negative impact, and
46% said reduction in biodiversity will have a negative impact on the global economy.

Viva la difference?

Last week EIRIS also ran a national opinion poll survey with Ipsos MORI to mark National Ethical Investment Week in France. The survey found that 60% of the French public said they attach either 'great importance' or 'some importance' to incorporating environmental, social and ethical issues when selecting financial products. Click here for further details.

"We've seen a huge increase in the amount of money being invested ethically and this has gone hand-in-hand with the interest in ethical consumerism in general" said Mark Robertson, Head of Communications at EIRIS and editor of YourEthicalMoney.org. "Our survey shows that expectations around ethical finance are evolving. The public now agree that big issues like climate change, dwindling natural resources and population growth will have a negative impact on the global economy".

"Since the credit-crunch, people are better informed about the impacts that their spending and investments can have, both positive and negative, and more of us are turning to ethical investment which takes a longer-term approach. By avoiding companies with a negative impact, or focusing investment on those providing positive products and services tackling key sustainability challenges, green and ethical funds offer the opportunity to both make money whilst tackling global problems" added Mr Robertson.

Click here to download a pdf copy of this news release.

Statistics charting the growth of the ethical investment retail fund market over the last 10 years are available here.

Ethical investment: are the French public interested?

6 October 2011

60% of French retail investors attach importance to environmental, social and ethical criteria in their savings decision, according to new research published today.

Version française ici. Une présentation détaillant les principaux résultats de l'enquête peut être téléchargée ici.

The national online consumer survey, conducted by Ipsos MORI on behalf of non-profit research organisation EIRIS, explores public attitudes to socially responsible investment (SRI) in France. It also marks the launch of the second national SRI week in France by Nathalie Kosciuzko-Morizet, the French Minister of Ecology, Sustainable Development, Transport and Housings.

The EIRIS consumer survey underlines the growing importance of SRI in France with 60% of survey respondents saying they attach either ‘great importance’ or ‘some importance’ to incorporating environmental, social and ethical issues when selecting financial products. However, the survey also identifies a lack of awareness of SRI financial products as a key barrier to SRI with 64% of respondents saying they have never heard of an SRI fund.

Key survey findings

Growing importance of environmental & social issues

14% of the French public who hold at least one saving accounts attach 'great importance' to environmental, social and ethical issues in their investment decisions. A further 46% say they attach 'some importance'.
45% said they plan to attach 'more importance' to these issues in the future; 34% said they don’t know.

Lack of awareness

64% of those surveyed said they have never heard of SRI. Only 8% know precisely what SRI is; 28% said they have heard of the concept but could not define it.
Of those that did know what SRI is, 49% said they’d be ready to invest part of their savings in an SRI fund if it was offered to them.

Motivation & interest in SRI

When considering what might motivate them to invest ethically, 55% of respondents cited the opportunity to choose financial products whose ethics match their other choices and decisions as consumers; 46% said the fact that SRI investments give their savings more meaning would motivate them. 41% said the opportunity to influence companies’ behaviour would motivate them.
40% of respondents were attracted by the opportunity to align return objectives with social and/or environmental considerations in their investment decisions.

Barriers

75% of respondents said a lack of information on SRI prevents them from investing ethically; 66% said difficulty in understanding how investing in an SRI fund can influence corporate behavior was a potential barrier, whilst 57% said a lack of transparency on how SRI might make a positive difference was also a potential barrier.

Split views on investment approaches

36% of respondents said they would be ‘very tempted’ by an SRI fund which excludes investment in companies on the basis of their business activities (e.g. tobacco production, arms manufacture) or poor business practices (e.g. forced labour, corruption).
26% said they would be very tempted by a fund which invests in companies from a given sector or encourages some positive practices (e.g. renewable energy).
19% said they would be very tempted by an SRI fund which adopys a 'best of sector' approach bu focussing investment on those companies within a given sector according to social and environmental criteria.
20% of respondents said they are interested in SRI funds that engage with companies to positively-influence a company’s strategy through dialogue with its management or by using their voting rights at AGMs.

Marion de Marcillac, Client Relationship Manager at EIRIS France said: “Our survey shows that French retail investors are interested in SRI funds, but a number of key barriers need to be overcome if more investors are to turn this interest into action by choosing SRI funds. SRI funds need to be made more visible to French investors and more information as to how SRI funds deliver a positive impact is needed to increase investor trusts and confidence and encourage more people to choose SRI funds.”

“EIRIS is very pleased to support once again the French SRI week with this survey and is delighted by the active involvement of Nathalie Kosciusko-Morizet, French Minister of Ecology, Sustainable Development, Transport and Housing” she continued.

Click here to download a presentation of the survey results.

Japan and Korea are top performers on ESG

4 October 2011

Companies based in Asia are making steady progress in addressing the ESG challenges they face but have some way to go before they catch up with their European peers, according to latest research from global responsible investment research specialists, EIRIS.

EIRIS' State of Responsible Business (Asia) report focuses on 786 Asian companies - 56 in China, 122 in Hong Kong, 47 in Singapore, 111 in South Korea and 450 in Japan to assess how well they are addressing key ESG challenges and compares their performance to their European and North American peers.

Launched at the 10th Anniversary Conference of the Association for Sustainable and Responsible Investment in Asia, EIRIS' report finds that companies in Japan and South Korea have the highest overall performance on environmental, social and governance (ESG) issues. Improvements in these countries have been bolstered through local initiatives such as the recent introduction of Seoul's "Low Carbon, Green Growth" initiative - which outlines a plan to reduce carbon emissions - along with a similar program in Japan.

Companies based in Hong Kong, China and Singapore, however, have failed to make significant progress on ESG factors. The world's second largest economy, China, has made limited improvements on environmental issues but still lags behinds its peers in most areas. Only 5% of the 56 Chinese companies analysed have strong environmental policies in place and just 2% displayed any proof of making progress in this regard.

Key research findings include:

EIRIS analysis shows that over 90% of the world's 2,090 largest companies have left at least one ESG risk unmanaged.
Japanese companies demonstrate the strongest ESG performance in Asia, closely followed by those in South Korea. Companies in China still lag behind others in Asia.
Asian companies perform well on climate change, but still need to address other 'material' environmental risks arising from water management and biodiversity.
Social stakeholder issues remain a key challenge. Almost all (90%) of Asian companies with operations in countries relevant for human rights concerns have no human rights policies in place.

Mark Robertson, Head of Communications at EIRIS said: "There is a growing focus on ESG in Asia, driven by interest in the region from global investors and nascent demand from local institutions. But more work is needed if companies, particularly those based in China, are to respond to investors and meet the governments' aim of enhancing corporate reputations through enhanced policies, management systems and reporting systems on ESG issues".

When comparing Asian companies to their global peers an uneven picture emerges. More than 40% of Asian companies' environmental policies were assessed as good or excellent, compared to two-thirds of companies in Europe. However, only a quarter of North American companies received similarly high scores.

"It's encouraging to see that that companies in Asia are making progress on ESG and are overtaking their global peers in some areas. Looking ahead, increased regulatory pressures, greater reporting requirements and the development of sustainability have the potential to be the biggest drivers of ESG" added Mr Robertson.

EIRIS research concludes that there is a huge opportunity for companies and investors to exploit the first mover advantage presented by enhanced social and governance disclosure in Asia. Increased coverage of social and governance issues will expose Asian companies to a broader investment base, particularly outside Asia, where responsible investment is more established.

Click here to download a copy of the report.

EIRIS finds Vedanta Resources has made limited progress on 2010 recommendations to improve ESG governance

19 July 2011

Responsible investment research specialists, EIRIS, has today published a report analysing how well Vedanta Resources has implemented the seven best practice recommendations that were contained in a previous report of July 2010. These were presented at the 2010 Vedanta AGM and were designed to address investors' concerns about environmental, social and governance (ESG) performance at Vedanta Resources (the FTSE 100 mining company with interests in India and around the world).

Vedanta Resources had its proposal to extract aluminium ore rejected by the Indian Ministry of Environment and Forests and was later instructed by the ministry to halt all construction work on Lanjigarh alumina refinery in Orissa. Responsible investors have been engaging with the company and some have disinvested because of concerns over stakeholder-related risks.

This engagement has had some success with Vedanta agreeing to respond to the recommendation to appoint a Chief Sustainability Officer and earlier this month it issued a new Sustainable Development Report that outlined how it is responding to a review of its operations by consultants Scott Wilson, the recommendations of whom overlapped with those of EIRIS.

However, EIRIS' report, One year on: Review of progress by Vedanta Resources on EIRIS' recommendations using a red-amber-green system to measure progress shows that the company has made only some progress (amber) on six of the seven recommendations with a red being applied to recommendation five on improving risk management systems.

Investors will want to assess the ongoing implementation of the commitments made by the company in its sustainability report and progress against the seven EIRIS recommendations. In particular they will want to monitor how well the company implements policies and systems on linking remuneration to ESG performance; grievance mechanisms; and alignment with international standards; as these are examples of areas where commitments have been made by the company.

Click here to download a copy of the report.

World's biggest companies failing on water risk management

13 June 2011

Only a tiny fraction of the world's biggest companies are adequately managing the various risks they face from water shortages, drought and pollution, according to new research from independent environmental, social and governance (ESG) research provider EIRIS.

Under a current business-as-usual scenario water demand is set to outstrip supply by 40% by 2030. This has the potential to put USD 63 trillion of global GDP at risk by 2050.

EIRIS' report A drought in your portfolio: are global companies responding to water scarcity? shows that 54% of 2,000 global companies analysed are exposed to water risks but take little or no action to mitigate them. Around half show no evidence of any management response to water risks whatsoever.

EIRIS research findings include:

54% of 2,000 global companies are exposed to water risks, but only 0.22% have adequate management systems, policies and reporting mechanisms in place to tackle the risks;
sectors such as oil & gas, mining, power generators, semi-conductor plants, retail chains and agriculture are heavily reliant on water and show high water risk exposure, and;
of those companies exposed to water risks only 9.7% have set either short or long-term targets on water consumption. Furthermore, only 9.7% have set targets on water quality.

However, further analysis reveals more promise. 36% of companies have at least acknowledged water as an issue that needs to be addressed and 22% demonstrate that they are monitoring water consumption.

Randeep Sanghera, report author and lead water analyst at EIRIS, said "The era of cheap and easy access to water is coming to end for companies. This poses a potentially far greater threat to business than the loss of other natural resources, including oil, yet the majority of companies and investors remain unaware of the risks they face".

Commenting on the research findings, James Winpenny, a consulting author for UNESCO's World Water Assessment Programme, said "It's clear that water scarcity creates both investment risks and opportunities. Through shareholder activism, investors can ensure that companies are fully aware of the impact of their operations on water, and vice versa on their exposure to water risk. They can also seek investment opportunities from the Green Economy agenda and align their portfolio strategies more closely to this".

"Water management deserves to be at the core of any ESG investment approach. Investors should demand an increased level of reporting on water and encourage companies to put the management of water at the centre of their sustainability strategies" added Sanghera.

Click here to download a copy of EIRIS' Global Water Risk report.

25 years after Chernobyl, the full extent of fall out from Fukushima is yet to be revealed

28 April 2011

The Chernobyl anniversary comes less than two months after the devastating earthquake and the tsunami that followed caused the world's second worst nuclear crisis.

It is difficult to gauge the full extent of the damage to the Fukushima Dai-ichi nuclear power plant. Questions remain as to how much radioactivity has been released into the local environment so far. After weeks of uncertainty, the Japanese Government has upgraded the crisis at the plant to level 7 of the INES scale, the same as Chernobyl.

As events at Fukushima continue to unfold, responsible investors are rightly asking questions about the impacts and implications for the broader nuclear power industry. To what extent was Tokyo Electric Power Co (TEPCO), the company which owns and operates the stricken Fukushima plant, adequately prepared? What are the short and long-term implications for investors in the nuclear power industry? And will other low-carbon energy sources such as natural gas receive a boost in light of what has happened?

Major challenges lay ahead before the situation at the three reactors that bore the brunt of the tsunami (units 1, 2, and 3) can be described as being under control. As recently as 25th April - six full weeks after the catastrophe - the temperature of the spent fuel storage pools at one of the reactors was still dangerously high. TEPCO has presented a roadmap to restore the plant to a stable condition within six to nine months. However, it has also revealed that it expects radiation to continue leaking for at least three months.

Currently, highly radioactive water is being pumped from the trenches and the flooded areas below the reactors and stored in hastily constructed pools. A vast amount of mildly radioactive water has been released into the ocean and there is evidence that certain radionuclides have now found their way into the food-chain, as evidenced by the caesium which has been found in fish caught in the Pacific off the coast of Japan. On land, the 30 km exclusion zone around the stricken plant has been confirmed and Japanese authorities have recently made it an offence to enter the zone.

TEPCO has been accused of not having prepared for a nuclear emergency in terms of the design of the station (for example not adopting better containment vessels for the reactors) and by opting for older, cheaper reactor technology when the reactor was first built. The company has responded that the plant was designed to withstand a quake of magnitude 7 on the Richter scale, but that the size of the earthquake that struck it on the 11th March (8.9) could not be foreseen.

Critics however have pointed out that whilst the crisis was initiated directly by the tsunami it quickly worsened as a consequence of a mix of failures at the plant. Examples include the multiple failures of the diesel emergency backup systems that circulate cooling water through the reactors, and the poor design of the sea defences that were inadequate to protect the plant from a tsunami of above-average size.

There is a history of malpractice in TEPCO's management of safety issues at its nuclear power plants. Notably, in 2002 the company chairman was forced to apologise and quit when it was discovered that the company had falsified reports of safety checks at TEPCO's nuclear power plants. In truth these checks were never carried out. The falsifications had been going on since the late 1970s and continued throughout the 1990s. However, there is little evidence to suggest that these cases of malpractice have had any direct impact on the current crisis at the Fukushima plant.

The outlook for TEPCO now looks increasingly bleak. The company's share price has fallen by a staggering 75% since the 11th March and although the price now seems to have stabilised the future costs of stabilising and decommissioning the stricken plant and compensating for the damage caused will be significant. Experts have warned that the cost of the full decommissioning and cleanup of the site alone may exceed USD 12bn (approx. GBP 7.3bn) and take as long as 30 years to complete. It is likely that the Japanese government will intervene and shoulder some of the costs, but the scale of the event and the intervention required is such that the prospect of nationalisation, or bankruptcy and reorganisation of TEPCO appears very real.

But what will be the impact of the Fukushima disaster on the nuclear power industry? Will it be enough to kill the 'nuclear renaissance'? The initial response has certainly been one of shock as governments around the world have been reawakened to some of the inherent dangers of nuclear power. Germany has declared an immediate shutdown of its older plants and a three-month moratorium on them until safety checks are conducted. Italy, too, has announced an indefinite moratorium on its long-announced plans to re-launch nuclear energy after shutting down its last nuclear power station over two decades ago. The European Union has also announced a series of 'stress tests' on the nuclear plants of its member states.

Cynics may argue that this is only the knee-jerk reaction of elected politicians in response to public opinion. That said, the introduction of increased safety measures in operating plants and new builds will undoubtedly add to the already significantly high cost of nuclear power. In the current economic environment cautious investors and cash-strapped governments may need to think carefully before investing in a nuclear industry which is currently much less popular than it was before the earthquake.

Events at Fukushima have undoubtedly damaged the reputation of the nuclear industry. With memories of Three Mile Island and Chernobyl disasters fading, policymakers and the public have increasingly perceived nuclear power as a 'green', low carbon alternative to fossil fuels and confidence in the industry had increased. However, with its safety credentials once again in question the industry may face an increasingly difficult environment in which to operate.

Today, only a small number of nuclear plants are under construction in the US, Europe or Japan. The highest numbers are amongst emerging countries like Russia, India and China. But even governments like China's, less burdened by the worry of assuaging the fears of a voting public opinion, are reassessing some of their nuclear plans and may end up in favour of further upgrading their existing commitment to renewables.

A pattern is already emerging that may see utilities in the West renouncing - with a few notable exceptions like France and Finland - their plans to expand nuclear power with new builds. Instead some are using power uprates (i.e. forcing the reactor to generate more power than it was originally designed for to increase electricity output) and re-licensing ageing nuclear reactors to prolong their life beyond the initially designed lifespan. In the US Exelon has announced an investment of USD 5bn over 5 years to expand its nuclear capacity through a programme of uprates to its fleet of nuclear power plants, while at the same time delaying the application for a new build nuclear power station in Victoria County and investing in a wind farm instead. Power uprates and life extensions, however, present their own risks as they put existing equipment under considerable stress and they have been severely criticised for this reason.

Other companies have disinvested from existing projects. In the US, NRG Energy has recently withdrawn from its South Texas Project - one of the most advanced plans for a new reactors in the US - leaving other shareholders, including Toshiba to decide what to do. This move may well further jeopardise the programme to build new nuclear power plants in the US.

As a minimum, there will likely be delays and extra costs. Pacific Gas & Electric, for example, has announced it has asked US nuclear regulators to delay processing an application to extend the life of its DiabloCanyon nuclear plant - which sits dangerously close to the San Andreas fault in California - and that it was seeking USD 64m to meet the added costs of conducting more in-depth seismic studies.

Many emerging market countries do not yet have the same flexibility as developed countries in deciding which energy sources will be used to make up their energy mix to fund the rapid growth of their economies. Those emerging market countries which do have nuclear programmes may well stick to their existing plans of building new nuclear reactors to meet increasing electricity demands from their burgeoning economies.

Yet, many of the risks presented by nuclear power remain: disposal of nuclear waste, risks of accidents, threats from terrorist and uncertainty as to the effect that the release of radioactivity has on the local environment.

At EIRIS we will continue to monitor developments at TEPCO's nuclear power plants at Fukushima, and other nuclear power operators around the world, and we will track the wider implications for responsible investors.

Alessandro Bracaglia

Research Analyst, Military and Nuclear Power

EIRIS

FTSE4Good launches corporate ESG Ratings service with EIRIS data

6 April 2011

A decade after the launch of the ground-breaking FTSE4Good Index Series, FTSE Group has today announced the launch of FTSE4Good ESG Ratings service using research from EIRIS.

FTSE4Good's new ESG Ratings service has been developed to help investors gain an objective measure of corporate ESG practice and risk. The ESG Ratings use research from responsible investment research experts EIRIS to measure the Environmental, Social and Governance (ESG) practices of over 2,300 public companies worldwide.

For the last ten years FTSE has worked with EIRIS to research corporate responsibility performance for its FTSE4Good index. EIRIS manages the research and analysis globally in order to cover the FTSE4Good Index eligible universe both directly and also via its network of international research partners.

FTSE’s ESG Ratings service builds on the success of the FTSE4Good index series and has been developed to provide institutional investors with a flexible and granular scoring model to enable them to understand a company’s ESG practices in multiple dimensions;

Overall ESG rating
Scores against a broad Environmental, Social and Governance pillar
Measurement against six ESG criteria themes including: environmental management, climate change, human and labour rights, supply chain labour standards, corporate governance and countering bribery

Peter Webster, Executive Director at EIRIS said: “FTSE’s new ESG Ratings service represents an exciting step forward in the development of FTSE4Good and we are delighted to have provided data on ESG issues for the Ratings. We believe that the ESG Ratings service will play a key role in encouraging investors to take a more longer-term approach by integrating ESG issues into their investment analysis”.

Click here to read a press statement from FTSE on the launch of the FTSE4Good ESG Ratings.

Cool Brands versus Hot Brands? Big names lack leadership on climate change

17 March 2011

Two-thirds of the world's top 100 brands are failing on climate change, according to latest research from responsible investment research firm EIRIS.

The report Cool Brands versus Hot Brands? focuses on the world's leading 100 brands, as identified by Interbrand1, and finds that 69% of those with a high climate change impact lack adequate policies, management systems and reporting on climate change.

Companies risk eroding brand value by failing to respond to the climate change concerns and expectations of customers, investors, NGOs and other key stakeholder groups. EIRIS' analysis reveals surprising differences in the way efforts to tackle climate change are embedded within a company's culture. Research parameters include product impacts, long-term targets, executive remuneration and disclosure.

Leader of the pack?

Gillette (ranked 3rd in Interbrand's top 100) achieved the highest overall climate change rating in EIRIS' analysis. The brand has established long-term targets on emissions reduction and displayed strong reporting against those targets.

Porsche, on the other hand, (ranked 72nd in Interbrand's top 100) achieved one of the lowest climate change scores in EIRIS' climate change analysis. This contrasts with other leading brands in the automobile and parts sector such as Toyota.

Apple vs Dell

Big differences exist in the extent to which leading technology brands are tackling climate change. Dell (Interband rank 42) has linked executive remuneration to climate change performance, established both long and short-term targets and has improved product-related climate change emissions.

However, Apple (Interbrand rank 17) has failed to implement any of these measures. On the other hand, Apple has shown an improvement in reducing its GHG emissions whilst Dell's GHG gas emissions have increased. However, it should be noted that other factors such as new business acquisitions, fluctuations in turnover, etc, can account for increases/decreases in GHG emissions.

Pepsi challenged?

Coca-Cola is at the top of the Interbrand 100 list, while PepsiCo is positioned at number 23. However, when looking at their relative responses to climate change a different picture emerges. While Coca-Cola has an assessment of 'intermediate', with a number of unidentified or unmanaged risks, PepsiCo scores 'good' according to EIRIS' methodology. Unlike Coca-cola, PepsiCo is therefore considered to have adequately managed its climate change risks.

Cool Brands versus Hot Brands? forms part of a EIRIS' wider annual climate change tracker report which analyses the performance of the world's biggest 300 companies in tackling climate change. This year's analysis of the world's 300 largest companies finds that:

33% of companies have a significant climate change impact. Of this 33%, only 27% are adequately managing the climate change risks they face. In 2008, only 16% adequately managed climate change risks
60% have now established short-term targets (48% in 2008), but only 46% have set long-term targets (25% in 2008), leaving significant room for improvement
In 2010, 31% of significant impact companies linked executive remuneration to carbon emissions, up from 14% in 2008

"The potential reputational damage to brand value associated with a failure to respond to the risks from climate change can have a direct impact on a company's profitability. A lack of mitigation measures can also lead to the loss of business productivity and business interruption" said Carlota Garcia-Manas, Head of Research at EIRIS.

"In the face of increased regulation, growing consumer expectations and greater investor awareness, climate change and other sustainability issues will become increasingly important factors in the determination of brand value. Investors in top brands need to consider the extent to which companies are safeguarding their brands by addressing both current and future climate change risks" she continued.

Click here to download a copy of the full research report.

Peter Webster named amongst the 100 most influential people in business ethics

1 February 2011

Peter Webster, EIRIS' Executive Director, has been named amongst the 100 most influential people in business ethics. Compiled by the Ethisphere Institute, the list of 100 individuals represents those that had significant impact in the realm of business ethics over the course of the year. Ethisphere sates that whilst the list ' recognizes those that have made a significant impact specifically during 2010’.

Individuals are represented accross eight core categories. In recognition of his continued leadership of EIRIS, Peter Webster is listed within the 'Investment and Research' category which focuses on the extent to which an individual has had an impact on corporate behaviour through influencing investor decisions and the deployment of investment capital due to research or institutional fund management practices.

Click here to view the full list.

Failing to invest ethically creates big risks for charities

27 January 2011

At a time when many UK charities are facing a tough funding environment, new research from the EIRIS Foundation finds that the public think worse of charities that don't invest ethically.

The survey 'What is the UK public's opinion of charitable investments' was conducted by the EIRIS Foundation and the Holly Hill Charitable Trust to gauge current opinions of charitable investments. The survey found that 78% of the UK public would think worse of a charity if they found out it had funds invested in activities that run contrary to its specific work and values.

Charities are under increasing pressure to be accountable and transparent in all that they do. In 2011 UK registered charities held nearly £78 billion in investments.

The survey results show that the public are as keen as ever to see that charities' investments further, rather than counter, their charitable aims; 74% of respondents agreed that large charities should adopt ethical investment policies. Charities which fail to invest ethically therefore run the risk of alienating supporters which, in turn, could result in a reduction in donations. This is something which charities can ill afford, at a time when figures published following last year's comprehensive spending review by ACEVO suggested that charities could face up to a £4.5bn reduction in funding as government cuts continue to take effect.

Key findings include:

87% of those surveyed either donated to charities and/or worked for them. Of these 89% were not familiar with the investments or investment policies of the charities they worked for, or donated to
84% of people agreed that charities should be fully transparent about their investments
74% of people agreed that large charities should adopt ethical investment policies prohibiting investment in activities that are contrary to their specific work and values
71% agreed that large charities or their fund managers should be pro-active shareholders, engaging with companies to demand high standards of environmental and social responsibility from the companies they invest in
78% of people agreed that they would think worse of a charity if they knew it had funds invested in activities contrary to its specific work and values

The survey is published as the Charity Commission consults on new investment guidance for trustees and others who make decisions on behalf of trustees about a charity's investments. The proposed revised version of Charities and Investment Matters (CC14) explains the legal framework for how ethical investment, mission connected investment and programme related investment can sit alongside standard investment approaches.

Mark Robertson, Head of Communications at EIRIS said: "Our survey provides clear evidence that the British public expect charities to be fully transparent and to think more about the environmental and social impacts that their investments have".

Over the last decade more charities have switched to a broader investment strategy. A survey published by the Charity Finance Director's Group and the EIRIS Foundation in 2010 found that 60% of charities with investments over £1 million now have an ethical investment policy, and 32% of those that that did not currently invest ethically were planning to discuss the issue in the coming year.

"The multiple benefits of ethical investment are well documented. Our survey results, coupled with the Charity Commission's new draft investment guidance, are perhaps the strongest signals yet that charities could be missing a trick by not broadening their investment strategy by linking investment activity directly with charitable aims" Robertson added.

Click here to download a full copy of the survey results.

COP Out? EIRIS report reveals extent of corporate failings on Biodiversity

20 December 2010

A month after delegates from around the world met in Nagoya, Japan, to agree on a series of measures aimed at reducing biodiversity loss and habitat change, EIRIS' latest report explores the likely impact the summit will have on businesses and investors.

At the UN COP 10 Convention on Biological Diversity, environment ministers agreed to cut the loss of forests and other natural habitats by half, increase the amount of land designated as nature reserves from 13% to 17% by 2020 and to raise the amount of marine and coastal areas protected by reserves from 1% to 10%.

All companies affect ecosystems and are dependent on functioning ecosystems to remain in business. The UN-backed Economics of Environment and Biodiversity initiative has estimated the annual cost of biodiversity loss at between USD 2 - 4.5 Trillion, representing approximately 7.5% of global GDP. However, EIRIS' latest report shows that the level of understanding over the impact of, and dependency on, biodiversity-related activities is being largely disregarded by the business community.

Entitled 'COP Out? Biodiversity loss and the risk to investors' the report's goal is to help investors understand the systematic risks that biodiversity loss represents to investments. It focuses on around 1,800 FTSE-listed companies and finds that 58% of them operate in sectors whose business activities have a considerable biodiversity impact. However, only 6% of these 'high impact' companies are assessed by EIRIS as having a good policy on biodiversity.

Key findings:

Very few FTSE-listed companies are assessed by EIRIS as having 'good' biodiversity policy assessments
Medium-impact sectors consistently lag high-impact sectors in their understanding of the relationship between nature and business models
Chemicals & pharmaceuticals, construction, property development and road distribution & shipping sectors are doing the least to tackle biodiversity. The forestry and paper sector displays the best performance
Sectors with high biodiversity impacts associated with their supply-chain are failing to tackle biodiversity
Few companies link biodiversity to other key issues such as climate change, air and water emissions, water use and waste
Regional disparities exist: European companies performed best, Asian companies performed worst

A key component of the COP10 agreement relates to the access to, and sharing of, genetic resources. Businesses may have to negotiate agreements to maintain access to genetic resources and may be required to pay into an international fund to finance research and projects aimed at protecting biodiversity in developing countries. This will have serious ramifications across various company sectors, with the pharmaceuticals sector likely to be severely hit. However, EIRIS' analysis shows that this sector is amongst those doing the least to tackle biodiversity.

Carlota Garcia-Manas, Head of Research at EIRIS said: "Over the next few decades ecosystems will be altered faster and more extensively than ever before. This poses both significant risks for investors as well as investment opportunities around companies producing more eco-efficient goods, services and new technologies".

"Investors should take steps to understand the systematic risks that biodiversity loss represents to their investments and use engagement channels to increase business participation in voluntary stewardship schemes to protect biodiversity, especially amongst companies based in medium-impact sectors" she continued.

Click here to download a copy of the report.

JSE announces constituents of its 2010 SRI Index

8 December 2010

The 2010 constituents of the Johannesburg Stock Exchange (JSE) Socially Responsible Investment (SRI) Index were announced last week.

The JSE SRI Index comprises companies which meet criteria related to their ESG policies, management practices and reporting. In a move designed to build local capacity in the field of ESG research, the JSE and EIRIS appointed a local research partner the University of Stellenbosch Business School (USB) to assist with research for 2010 SRI index review.

Further to recent announcements by the JSE and the Government Employees Pension Fund (GEPF), South Africa's largest pension fund and a significant client of many local institutions, instutional investors are facing increased pressure to consider sustainability criteria when assessing potential investments. Both groups have announced that they intend working together closely to support the GEPF's strides in mainstreaming responsible investment.

In this years review:

74 companies out of 106 assessed qualified for the SRI Index
5 companies have entered the Index for the first time
23 companies have been identified as best performers
2 of these qualified as best performers for the first time
32 companies were not included in the index, with the most common cause for this being environmental policy and reporting
Of the 106 companies assessed in this year's review, just under 80% submitted detailed responses (This response rate is particularly high, also in global terms.)

"This year's composition reflects the fact that companies now see ESG principles as part of normal business practice and institutional investors now face pressure to consider sustainability criteria when assessing potential investments" said Corli Le Roux, Head of the JSE Socially Responsible Investment Index.

Peter Webster, Executive Director at EIRIS, said: "It's great to see so that so many more companies eligible for inclusion in the JSE SRI index this year which shows the leading role that stock exchanges around the world can play in driving up standards of ESG performance".

EIRIS appoints new Head of Research

15 November 2010

EIRIS is delighted to announce the appointment of Carlota Garcia-Manas to the role of Head of Research where she will head up a team of over 30 researchers and six international research partners, providing global responsible investment research.

Carlota joined EIRIS in 2004 and has latterly been both Assistant Head of Research and Co-Head of Research. Carlota brings significant knowledge and experience in the development of ESG research. This has included new research on financial institutions including criteria development and sector expertise. Carlota has also developed EIRIS' new global criteria for the assessment of water risks, to be launched in 2011, and has led on the ongoing development of EIRIS’ Sovereign Bond product.

Carlota has been an active member of the UNEP-FI/GRI working group that developed the financial industry sector supplement to the GRI’s reporting guidelines. She holds a degree in Civil Engineering and also has an MSc in Environmental Economics from Imperial College, London. Carlota is currently completing a Certificate of Higher Education in Management. Before joining EIRIS, she worked at London Remade and Bonn City Council in Germany.

Commenting on her new role Carlota said "I'm really looking forward to leading our dynamic research team as we develop the next generation of EIRIS research. I’m fully committed to maintaining EIRIS’ reputation for quality and building on the depth and scope of our research, and ensuring that our clients continue to receive top-notch ESG research and expertise from our highly skilled research analysts.”

“2010 has been a great year in which we’ve launched new products on voting and engagement as well as a new controversial weapons service, enhanced our ESG risk criteria, furthered our coverage of emerging markets, and added enhancements to our Sovereign Bonds and Convention Watch products. I look forward to leading EIRIS’ research capacity through the next stage of its development in 2011” she added.

This announcement follows the departure of Stephanie Maier, EIRIS' previous Head of Research, who has left to lead and coordinate delivery of Aviva Investors Corporate Responsibility programme, as well as provide input into Aviva Investors external engagement activities.

Public want banks to lend ethically, survey finds

8 November 2010

73% of the British public think that banks should have ethical lending policies in place to prevent them from investing in, or lending to, companies involved in controversial areas such as arms manufacturing, or companies with poor records on the environment and human rights, according to new research released today.

The national online consumer survey, conducted by Ipsos MORI on behalf of non-profit research organisation EIRIS, explores current consumer attitudes to green and ethical finance. The survey launched as EIRIS figures show that the amount of money invested ethically in the UK has risen 289% over the last decade.

The survey identifies clear evidence of the need for change in all investment and lending practices. 66% of the survey respondents think that banks and other financial institutions have not learnt the lessons needed to prevent a future financial crisis but instead have reverted to 'business as usual'.

In the wake of the BP oil spill, many consumers recognise the impact that green and ethical issues can have on a company's bottom line. 82% of the British public think that it is important for financial product providers to pay more attention to environmental, social and governance risks when deciding which companies to invest in or lend money to, as part of ensuring a good financial return.

Survey respondents were presented with a list of ways that banks or financial institutions could offer more to their customers. Ranked most highly was the disclosure of information on how and where banks lend to or invest their money, with 77% thinking that banks or financial services providers should have this.

Other key findings

When asked what might encourage them to switch to an ethical financial product or service:

38% would be more likely to change if more information was available on the high street about ethical/green products
43% said they would be more likely to switch to an ethical financial product if its green and ethical credentials were externally verified so that it was easier to trust the claims made
41% would be more likely to change if a greater choice of ethical/green products was available
37% would be more likely to change if there was more information available on how green/ethical products make a difference in the world

Mark Robertson, Head of Communications at EIRIS said "It's clear that there's a lot more that financial institutions can do to build trust and persuade us that they have switched away from short-term, unsustainable investing and lending practices. Our survey shows that there's a huge appetite for a more intelligent approach to finance which places a greater emphasis on society and environment as part of a path towards a more sustainable financial future".

In order to assist people looking for ethical financial products, EIRIS has launched www.YourEthicalMoney.org - the UK's first consumer website dedicated to providing free, independent and unbiased information on all aspects of ethical finance.

The survey is launched to mark the UK's third National Ethical Investment Week which aims to raise the profile of green and ethical investment in the UK.

The rise and rise of responsible investment reporting

4 November 2010

For years we have pressed companies to report more fully on their environment, social and governance performance.

But now the rising tide of reporting is lapping at the feet of investors themselves. Around 800 UN Principles for Responsible Investment signatories have to complete detailed reports each year explaining their progress on engagement, integration and disclosure. Last year 40% of those chose to make the report public, up from 25% the year before.

In the UK the Financial Reporting Council's Stewardship Code will require asset owners and asset managers to report on their adherence to these new and important principles. There are similar proposals in South Africa - doubtless other regions will follow. Amongst retail fund managers EuroSIF has promoted its SRI Retail Fund Transparency Guidelines for a number of years and is now seeking to boost these through an independent auditing process.

As the reporting tide continues to rise, it is worth asking what is the point of responsible investment reporting by investors and what can it achieve?

Our experience of tells us a number of things:

Reporting publicly can lead to those working within in an organisation taking ESG issues more seriously
This in turn creates opportunities to raise the profile of ESG, leading to more resources and greater support from senior management
Common reporting obligations are enormously useful for those who need to compare asset managers or asset owners to understand skills and capabilities in responsible investment

Good reporting should provide firm evidence that an organisation is taking responsible investment seriously. But we also know that bad reporting conveys very little and is nothing better than a box ticking exercise. Plus, there's the added danger that more time is spent on reporting on an organisation's responsible investment activities than is actually spent on carrying out and developing those functions.

So what questions do we need to ask to ensure that the rising tide of reporting requirements add serious value by driving forward responsible investment?

Here are some possible starting points:

Start by asking what the members of your pension scheme, or the clients of your fund management service, are really looking for and then use the reporting process both to align the organisation with what they want and to demonstrate to them in a convincing way what you are doing on their behalf
Identify the best ways to use reporting to generate top-level commitment to responsible investment and encourage serious take-up amongst colleagues
Ask what opportunities does reporting provide to make your organisation a more valued and better player in the investment chain (in both directions)
Identify any responsible investment challenges you need to tackle and use the whole exercise to reach out to stakeholders who you value as partners
Use reporting to benchmark your own performance against others to find ways in which you can move forward

These and many other questions will be discussed at EIRIS' forthcoming seminar Reporting back? Why, and how, should Institutional Investors report on Responsible Investment? on the 10th of November in London.

Reporting requirements are clearly going to be an increasing part of the lives of all those who work in the field of responsible investment in the next period. Using reporting in the most creative and effective way is going to be an important part of making sure we make the best use of the scarce time available to the growing (but still relatively small) band of people devoted to this aspect of the investment process.

Peter Webster

Can the finance sector restore its reputation?

21 October 2010

Not if you believe Steve Cummins, Chief Executive of TheCityUK, the body focussing on promoting and developing the UK finance sector who spoke at the UKSIF Annual Lecture earlier this week.

In presenting the case for maintaining the UK's role as a key centre for sustainable and responsible finance, he made a particularly interesting claim that once you have lost public trust and confidence you cannot recover or restore the same trust and confidence. Instead you have to find a new basis on which to gain fresh trust and confidence.

If that is true, it means that the path to the rehabilitation of the finance sector needs to be a new one. One, perhaps, in which financial firms position themselves as the eyes and ears of investors looking for, and dealing with, forthcoming problems in the marketplace: protecting the interests of all rather than simply seeking to avoid disaster themselves (with mixed success) and trying to stay one step ahead of the regulators.

That would mean seriously addressing issues like climate change and biodiversity and ways in which globalisation could fail to benefit everyone, each of which themes contain the seeds of mass value destruction for the world's investors if not properly addressed.

It might also involve asking what culture and leadership is appropriate for a finance sector playing its part in long term sustainable wealth creation for the benefit of society as a whole.

All of this adds up the kind of new approach that might indeed generate fresh public esteem for the finance sector and all who work in it.

And while may all of this may sound like something of a challenge the significance of Steve Cumming’s remark is that anything less than a radical break with the past might simply not do the trick in rebuilding trust and confidence. So if TheCityUK is willing to set out on such a radical new approach it will be down to its backers (who include many of the big names in UK finance) to rise to the challenge and to make good use of all that UKSIF and others can bring to that journey.

A transcript of Steve Cummins speech is available here

Peter Webster

Mexican Stock Exchange hires EIRIS to develop new Sustainability Index

The Mexican Stock Exchange (BMV) is partnering with global responsible investment research specialists EIRIS to develop its new sustainability index.

BMV's new sustainability index will assess companies according to a range of environmental and social sustainability and corporate governance criteria, which are designed to reflect internationally recognised standards of corporate social responsibility. The sustainability index is due to be formally launched at the United Nations Climate Change Conference in Cancún, Mexico, in November 2010.

EIRIS, along with its newly-appointed local research partner in Mexico, Ecobanca, is advising the BMV on how best to enhance corporate transparency and performance on sustainability issues amongst Mexican-listed companies, and is working with the exchange on the development of listing criteria and assessment methodology for the new sustainability index.

Peter Webster, Executive Director at EIRIS said: "Stock exchanges have a key role to play in promoting sustainbaility, transprency and disclosure and we are delighted to be working with BMV on the development of its new Sustainability Index. This partnership comes at an exciting time for EIRIS as we continue to expand our global research coverage through the recent appointment of new research partners in Israel and Mexico".

EIRIS has more than 27 years of experience in the environmental, social and corporate governance research of companies, and is the data provider for major index providers around the globe including the UK-based FTSE4Good Indices and the Johannesburg Stock Exchange's Socially Responsible Investment (SRI) Index.

EIRIS' latest publication Sustainable Stock Exchanges: Improving ESG standards among listed companies focuses on twenty leading developed and emerging market stock exchanges and charts the progress in driving improvements in environmental, social and governance (ESG) issues through their listing requirements and products. The publication calls for stock exchanges to sharpen their focus on enhancing corporate transparency and performance on sustainability issues.

Click here to download a copy of the report.

A printable PDF of this press release is available here.

Socially Responsible Investment: are the French public interested?

5 October 2010

42% of the French public want to know about the socially responsible investment credentials of the next financial product or service that they buy, according to a national opinion survey published today.

The 1020 respondents who took part in the survey said that banks and financial institutions should prioritise protecting human rights (60% rated between 7 and 10 on the priority scale), protecting the environment (60%) and tackling climate change (54%) when lending or investing money.

Ethical issues such as avoiding tobacco companies (31%) or arms manufacturers (36%) were also issues many respondents thought banks and financial institutions should prioritise.

Key survey findings

Significant Interest in SRI

57% of those who said they are interested in finding out more about the ethical credentials of financial products and services said they are likely to take these considerations into account when deciding which savings or investment products to buy in future.

Financial performance

Only 17% of respondents think that SRI products 'are less likely to perform as well as similar standard products’

Human rights and environment protection have priority

Respondents were presented with a list of issues and asked on a scale of 1-10' (with 1 being low priority and 10 high priority) 'to what extent do you think banks and financial institutions should prioritise the following issues when deciding who they will or will not lend money to or invest in
Issues emerging as the highest priority were equally protecting human rights (60% scoring 7 - 10) and protecting the environment (60%), followed by tackling climate change (54%), investing in fair trade (52%), good governance (45%) and avoiding arms manufacturers (36%)
A smaller proportion prioritised the avoidance of companies involved in genetic engineering (25% scoring 7 - 10), the manufacturing of alcohol (28%), gambling (29%) and tobacco (31%)

Barriers: low awareness, lack of information and some mistrust

59% of those surveyed could not name or describe in detail any SRI products
Awareness is low even among those that stated they were interested or likely to consider SRI credentials when next choosing a product or service; 61% of those interested and 59% of those likely to consider could not name or describe in detail any SRI product
The survey highlights a lack of information and a lack of clarity as key barriers to people purchasing SRI products. 50% of respondents agree that ‘there is not enough information available on how SRI products make a visible difference in the world’; 45% agree that they ‘don't know where to go to find out information’ and 44% of respondents agree that ‘the information available is not clear enough’
37% agree that they would not buy SRI products because they 'do not trust the claims of financial providers'. 33% of respondents agree that they would not buy ethical financial products because 'there is no external verification of the ethical claims such products make'

Nadia Laine, Head of Client Services (Europe) at EIRIS said: “Our survey provides firm evidence of growing interest in socially responsible finance, suggesting that the message that it is possible to both make money and make a positive difference when investing responsibly is starting to get through to consumers. But levels of awareness, trust and confidence in SRI products are low. The industry must respond with greater transparency and provide clearer information on how saving and investing can make a positive difference. Our survey suggests that demand for ethical financial products and services is set to continue as more consumers question how and where their money is invested”.

“French consumers attitude towards ethical products is quite in line with the attitude of the British. In the UK, a larger priority is given to ethical issues such as avoiding arm manufacturers (61% in the UK compared to 36% in France) or tobacco (37% vs. 31%) but contemporary issues, whether they are social or environmental, remain the most important priority for the French and the British alike.”she continued.*

“This week, the French national SRI week highlighted a dynamic SRI French market and the willingness of SRI actors to turn towards French consumers” added Grégoire Cousté, Project Manager at the French Social Investment Forum (FIR).

A presentation featuring key findings from the survey can be downloaded in English and French.

A printable PDF of this press release is available in English and in French.

* A similar consumer survey was conducted in the UK by Ipsos Mori on behalf of EIRIS in November 2009, the results of which can be downloaded here.

EIRIS recommends mandatory ESG disclosure in new sustainable stock exchanges report

10 September 2010

EIRIS latest report released in China at the UN World Investment Forum calls for stock exchanges around the world to sharpen their focus on enhancing corporate transparency and performance on sustainability issues.

The report Sustainable Stock Exchanges: improving ESG standards among listed companies focuses on twenty leading developed and emerging market stock exchanges and examines how systematically they incorporate full environmental, social and governance (ESG) standards into their listing rules and trading products.

The report also provides insights and recommendations on the various steps which stock exchanges should take to further promote the integration of ESG criteria into investment analysis and decision-making.

Recommendations for Stock Exchanges

Incorporate mandatory ESG disclosure standards (including comply or explain provisions where relevant) into IPO and ongoing listing rules in the same way that financial reporting is a requirement for all companies
Make it a listing requirement for companies to put their sustainability strategy and reporting to the vote at their AGM
Play a leading role by improving their own ESG disclosure and performance if they are asking for similar standards from companies listed on their exchange
Encourage best practice among companies through development of indices that incorporate full ESG inclusion criteria
Promote cooperation with regulators, investors, companies, analysts, and wider stakeholders to help harmonise integrated reporting into a single global framework
Periodically review any actions taken in line with the above recommendations for addressing ESG factors in order to help create a level playing field necessary to push the implementation of the sustainability agenda to a higher level

Peter Webster, Executive Director at EIRIS said: “By balancing regulatory and voluntary approaches, exchanges can play a key role in sustainable long-term wealth creation. Whether through listing rules, the creation of sustainability indices, or giving investors votes on sustainability issues, their role at the centre of the financial system makes them key players. Interestingly, much of the leadership in this field at present is coming from emerging markets in general and from Asia in particular, but we see movement from exchanges around the world."

Click here to download a copy of the report.

Repercussions from BP spill will extend far beyond ‘frontier oil’

4 August 2010

As BP finally appears to have stemmed the flow of oil from its blown-out well in the Gulf of Mexico, many in the responsible investment industry are continuing to reflect on their response to the crisis.

What did we know about BP before the current crisis? What questions should we have asked? And what kind of responsible investment approaches to BP and other oil and gas companies make sense in light of what’s happened?

Global demand for oil continues to surge as industrialisation accelerates in China, India and Brazil. In the developed world concern is growing that the demand for oil could soon begin to outstrip supply. At the same time western governments are seeking to reduce their reliance for oil from regimes in the middle east and elsewhere.

Energy companies are increasingly turning to ‘frontier oil’ reserves as they search for scarce resources in hostile and fragile environments. In addition to BP’s deep sea operations in Alsaka, oil extraction is now taking place in the Davis Strait between Greenland and Baffin Island, whilst attempts to find oil in the South Atlantic off the Falklands are ongoing, to name but a few examples.

The impacts of the disaster in the Gulf of Mexico will likely extend beyond frontier oil and deep sea drilling. The EC Energy Commission has recently announced that it wants to impose a moratorium on drilling new oil wells in the North Sea. Oil and gas companies around the world can expect more lobbying over ‘business as usual’ type approaches, the introduction of moratoria, other restrictions and increased regulations, as well as increased scrutiny on how such companies are incentivised and given tax breaks as compared to other energy technologies, such as renewable energy.

Here at EIRIS, the BP crisis has led us to reflect on the indicators we use to identify the risky activities that oil and gas companies expose themselves to and to assess how well companies are responding to these risks. Over the last few years BP’s policies, management systems and reporting on environmental issues have been highly rated – especially when compared to other companies in the oil and gas sector. However, despite a strong track record on reporting, transparency and engagement with stakeholders, BP has also demonstrated a string of serious problems, most of which have been concentrated in their US operations.

As companies develop ever more sophisticated public relations and corporate communications functions, challenges clearly exist around how best to reconcile the ESG information disclosed by companies with their actual performance on the ground.

Our experience tells us that companies have a tendency to disclose information that puts them in the best light. In order to counter this inherent bias we therefore ask companies to share examples of what they do when things go wrong – how they handle controversies for example. We also balance information disclosed by companies with regulatory information, information from NGOs, trade unions and the press, in order to ensure that our clients get the ‘full picture’.

Our research approach uses a policy, management-systems, reporting and performance framework to determine how well companies are tackling the various ESG and safety issues they face. We look to see if companies have made commitments to tackle these issues, assess how effectively they are implementing these commitments and search for any evidence which may or may not demonstrate that these commitments are being implemented effectively.

Furthermore, through our Convention Watch Service we identify allegations of major corporate performance failings on key ESG issues, such as the explosion of BP’s Texas City Oil refinery in 2005 when 15 people lost their lives, and we review and assess the quality of a company’s response to these allegations.

The explosion and subsequent oil spill in the Gulf of Mexico is, in part, the result of a terrible accident and such accidents can be difficult to predict. But as the global demand for oil increases, companies are turning to increasingly difficult and risky extraction technologies to meet this demand.

Mainstream investors have often been accused of putting significant pressure on companies to generate maximum profits on a quarterly basis. The BP oil spill illustrates the delicate balance (and sometimes less delicate imbalance) that can arise between protecting the environment and creating wealth. Investors have a potentially important role to play in managing that balance as part of long-term sustainable wealth creation.

The BP oil spill has also been very visible, both on our television screens and in the sense that the costs are falling heavily on the balance sheet of one company. But there are much larger potential costs associated with a collective failure to tackle climate change, estimated by the Stern Review as between 5% and 20% of total global GDP. Those less visible costs may well fall across the portfolios held by investors and have much wider and longer-lasting consequences for us all. They deserve at least as much focussed attention as has been rightly paid to this incident.

We will continue to focus our attention on the ‘extra financial’ ESG issues which affect the oil and gas sector, in order to enable our clients to gain a more sophisticated understanding of the extent to which these key risk issues are being addressed.

Mark Robertson

EIRIS recommends governance steps to tackle investor concerns at Vedanta

22 July 2010

Responsible investment research specialists, EIRIS, has today published a series of best practice recommendations designed to address investors' concerns about environmental, social and governance (ESG) practices at Vedanta Resources (the FTSE 100 mining Company with interests in India and around the world).

Vedanta Resources is facing growing international scrutiny from investors and NGOs for its plans for a bauxite mine and the expansion of its Lanjigarh alumina refinery. Responsible investors have been engaging with the Company and some have disinvested because of concerns over stakeholder-related risks.

EIRIS' report Improving Vedanta Resources' governance of responsible business practice provides details of allegations against the company relating to human rights issues, indigenous rights, bribery and corruption and also environmental issues.

The report also draws on best practice from amongst other mining companies who face similar ESG risks in order to propose ways in which Vedanta can strengthen its approach to responsible business practices.

Click here to download a copy of the report.

JSE & EIRIS appoint South African research partner for 2010 SRI index review

6 July 2010

The Johannesburg Stock Exchange (JSE) and UK-based responsible investment research specialists EIRIS today announced the appointment of local research partner the University of Stellenbosch Business School (USB) to conduct the company analysis for the 2010 JSE Socially Responsible Investment (SRI) Index.

Launched in 2004, the JSE SRI Index is a broad-based triple bottom line and governance index which has become a widely accepted gauge for good corporate citizenship for companies. The index employs a broad range of listing criteria which reflect global SRI standards while accommodating issues peculiar to South Africa such as Black Economic Empowerment and HIV/AIDS.

The 2010 SRI Index review process, which commences within the next couple of weeks, will be undertaken by EIRIS in conjunction with the business school's Unit of Corporate Governance in Africa headed by Daniel Malan. "The involvement of a local partner is a significant step forward in the building of capacity in South Africa around ESG knowledge and research," says Corli le Roux, Head of the SRI Index at the JSE.

As part of the process of transferring knowledge and building capacity, the Unit will handle the research of a large percentage of companies this year, while the remainder will be handled by EIRIS. "The intention is that in due course the Unit will be responsible for the bulk of the research. The JSE continues its relationship with EIRIS, which remains responsible for the oversight of the entire research process and the final quality assurance of the analysis. As far as companies are concerned, the process will remain unchanged," adds Le Roux.

"We have been looking for opportunities to build a local partnership as the index has become more established. Around the world we find that our local partnerships deliver better local knowledge and provide valuable research insights," said Peter Webster, Executive Director of EIRIS.

"We are very pleased to be able to contribute to skills development in South Africa regarding this increasingly important aspect of the investment process. The Unit for Corporate Governance in Africa at the USB has an established track record in the field of corporate governance and as investors around the world widen their governance concerns to include social and environmental issues we look forward to working together to address that demand in South Africa," he continued.

"We are looking forward to working with EIRIS, an acknowledged global expert in responsible investment. We also anticipate synergies to develop between different research processes, which can only benefit South African companies," says Malan. The Unit of Corporate Governance has conducted related research on behalf of the Public Investment Corporation.

New guidance launched to help more charity trustees invest responsibly

29 June 2010

A new guide Socially Responsible Investment - A practical introduction for charity trustees is launched today to help the increasing number of trustees who are adopting or updating responsible investment strategies on behalf of their organisations.

Jointly launched by the EIRIS Foundation and Charity Finance Directors' Group (CFDG), the free guide provides practical advice and presents case studies of charities that have adopted a responsible investment approach to help other charities to align their principles with their investment practices.

Alastair Hanton, Chair of the EIRIS Foundation said: 'EIRIS has been working with charities in this area for more than 25 years. This new guide will prove indispensable to trustees embarking on a Responsible Investment strategy. Investing responsibly offers trustees the opportunity to reduce investment risks and also to ensure that on every level their organisations are contributing to the building of a fairer society'.

Caron Bradshaw, Chief Executive of CFDG, said: 'As the big society agenda develops charities will increasingly be looking for ways to creatively deliver their objectives. Socially responsible investment can help in provide significant mission related, reputational and even financial benefits. This toolkit is a meaningful contribution to the development of trustees' strategy and we are very happy to partner its launch'.

Click here to download a free copy of Socially Responsible Investment - A practical introduction for charity trustees.

EIRIS report reveals €1.2tn of unmanaged climate change risks amongst Europe's top companies

24 June 2010

Latest research from EIRIS, the London-based non-profit responsible investment research specialists, shows that leading European companies representing €1.2 trillion by market capitalisation are failing to address the various climate change risks they are exposed to.

Climate change has the potential to seriously impact shareholder value and will affect businesses across every sector of the economy, especially in the medium to long term.

The EIRIS 2010 European Climate Change Tracker Report focuses on the activities of 300 companies listed on the FTSE Eurofirst Index and analyses both the extent of their climate change impacts and also the quality of their responses to climate change.

EIRIS' research focuses on key parameters which enable investors to understand the extent to which efforts to tackle climate change are embedded within a company's culture. Research parameters include product impacts, long-term targets, executive remuneration and disclosure.

Key research findings

Poor performance, regional differences

EIRIS identifies over a third (41%) of Europe's largest 300 companies as having a significant climate change impact. Of this 41%, approximately two thirds (64%) are failing to adequately manage the climate change risks they face. Most of the worst performers are in sectors with the highest climate change impact.
Corporate responses to climate change vary between European countries. The best performing companies are from the most economically powerful European countries, namely the UK, Germany and France.

Product impacts

Although 97% of the European companies with potential product impact have a product policy commitment, only 10% of these have targets in place to address impacts arising from products.

Remuneration

Performance-based compensation can incentivise company leaders to improve corporate climate change performance. 62% of very high and high climate change impact companies are already linking performance-based remuneration with emissions reduction initiatives.

Long-term targets

Long-term targets (more than 5 years) are a key to the effective management of climate change. 55% of large climate change impact companies in the FTSE Eurofirst 300 have long-term targets in place.
High impact industries like oil & gas and electricity contain the lowest proportion of companies with long-term climate targets in place.

Peter Webster, Executive Director at EIRIS said: 'Externalities such as climate change pose major risks to the global economy, yet many investors are still not fully aware of these risks, nor do they know what to do about them. Climate change impacts arising from companies' products can be very significant yet very few companies have targets in place to address these impacts. It's important that investors focus on the bigger picture and consider both indirect and direct emissions.'

'We urge investors to exert their influence and engage for long-term targets, identify and respond to portfolio risk, encourage companies to consider product strategies and their product impact on climate change and increase their investment in climate change solutions' he continued.

EIRIS research also identifies a number of improvements in the strategies that companies have put in place with regard to their climate change impact. For example, it is encouraging to see some evidence that regulation and the increasing engagement activity of investors on climate change is driving companies to focus more attention on the climate change risks and opportunities they face.

The full version of EIRIS' 2010 European Climate Change Tracker report can be downloaded here.

EIRIS has recently launched Climate Change Toolkit Products to help investors assess their portfolios and design investment strategies in response to the challenge of a carbon-constrained economy.

A printable PDF of this press release is available here.

Investors in China, Egypt and Vietnam face greatest ESG risks

14 June 2010

Research published by EIRIS, the London based non-profit responsible investment research specialists, shows that amongst leading emerging market economies, China, Egypt and Vietnam perform the worst in terms of Environmental, Social and Governance (ESG) indicators.

The 2010 version of the EIRIS Country Sustainability Profiles for investors in sovereign bonds includes a comparison of those emerging market countries that will play a key role in driving global economic development over the decades ahead. The countries analysed for the comparison were Brazil, China, Egypt, India, Indonesia, Mexico, Pakistan, Philippines, Russia, South Korea, Turkey and Vietnam.

Co-Head of Research at EIRIS, Carlota Garcia-Manas said: ‘The poor performance of China, particularly in the area of Governance but also scoring low on environmental indicators, should be of particular concern to investors given that its economy is due to overtake the USA’s as the world’s largest over the next 20 years.’

The three best performing emerging market countries were South Korea, Brazil and Mexico. Both Mexico and Brazil scored higher on Environmental indicators than Canada and the United States, showing that it is possible for emerging markets to experience rapid growth and to mitigate ESG risks.

The case of Thailand shows the importance to investors of integrating ESG factors into their decisions about investing in sovereign wealth bonds. Thailand’s political stability indicator score has declined every year for the five years that EIRIS has been publishing its Country Sustainability Profiles. In 2009 the credit rating agencies downgraded the status of Thailand’s sovereign credit ratings, citing the inability of the government to prevent civil unrest. The ratings agencies have recently sounded warnings about additional downgrades in response to continuing political instability in the country.

Of all 68 countries surveyed on the 49 environmental, social and governance indicators the three best performers were Sweden, Austria and Switzerland.

The EIRIS Country Sustainability data is delivered in such a way that it can be manipulated by users to create their own views and weightings for particular issues to give the investor a bespoke rating, ranking and profile for each country.

A printable PDF of this press release is available here

UK ethical investment hits record high of £9.5 billion

1 June 2010

Figures released today by EIRIS, the London based non-profit sustainable investment specialists, show that the amount of money invested in Britain’s green and ethical retail funds (i.e. those funds open to the general public) reached £9.5 billion*.

The £9.5 billion represents approximately three quarters of a million investors in ethical funds, up from around 200,000 investors in 1999 when around £2.4 billion was invested ethically in the UK.

The last ten years has also seen the universe of UK ethical retail funds expand considerably. There are now almost 100 green and ethical funds available to UK investors - a decade ago there were just a couple of dozen.

Growing consumer interest in ethical finance is backed up by the findings of EIRIS’ recent Ipsos/MORI survey national consumer which explored post credit-crunch attitudes to ethical finance and found that 44% of the British public are interested in finding out about the ethical credentials of the next financial product or service that they buy. Three-quarters of those interested also said they are likely to take this into consideration when next buying a financial product or service.

Mark Robertson, EIRIS spokesperson said ‘2010 is a critical year for rebuilding public trust in UK financial institutions. It’s clear that increasing numbers of consumers are turning to those financial institutions which offer financial products that make money whilst making a positive difference to the world’.

‘The world is changing fast and many of the issues targeted by green and ethical investment funds such as the need to tackle ageing populations, reduce levels of obesity, address the global power shortage, tackle water scarcity and climate change are creating attractive business opportunities, which in turn are creating great investment opportunities which consumers can take advantage of’ he continued.

Growing consumer interest in issues like climate change, human rights, fairtrade and poverty is set to drive demand for green and ethical investment which will be further boosted by the recent launch of the UK’s first ever consumer website dedicated to ethical finance, YourEthicalMoney.org. This independent, non-profit website provides free advice to help anyone wanting to learn about how and where their money is invested, search for green and ethical financial products, or find out how they can help make finance more sustainable.

* Figures based on total assets under management datat collected from UK green and ethical funds as at 31st December 2009

A printable PDF of this press release is available here

South Korean companies embrace sustainability: but human rights and board independence remain key challenges

22 April 2010

A new report launched today on the Corporate Social Responsibility (CSR) reporting practices of 10 major South Korean companies finds strong reporting on environmental issues but reveals a relatively poor understanding of and reporting on social issues, especially human rights and other stakeholder concerns.

The report Unlocking Investment Potential: ESG Disclosure in Korean Companies is an initiative of the Emerging Markets Disclosure Project (EMDP) Korean team and aims to further emerging market investors' understanding of Korea's Responsible Investment (RI)/Corporate Social Responsibility (CSR) landscape; explore trends in Korean companies' environmental, social and governance (ESG) reporting; and promote greater ESG disclosure. The report is authored by the Korean CSR Research Service (KOCSR), global sustainability research house EIRIS and Responsible Research based in Singapore.

Since 2006, the number of South Korean companies publishing CSR reports has increased rapidly, with some even using the Global Reporting Initiative (GRI) reporting framework for guidance. However, investors and other ESG/CSR experts have expressed concerns over the quality and lack of materiality in corporate reporting; only a tiny fraction of these glossy brochures deliver greater transparency on ESG risk to investors.

The EMDP Korea report is a baseline study on the status of CSR and RI in Korea, as well as ESG reporting trends amongst a sample of 10 South Korean companies: Hynix, Hyundai Motor, KEPCO, KT, LG Chemical, LG Electronics, POSCO, Samsung Electronics, Shinhan Financial Group and SKT. The EMDP project team will use the report findings as a basis for initial engagement with these companies, with a specific focus on those areas that are identified as weak on ESG disclosure.

Key findings

Many Korean companies, even larger listed ones, do not publish CSR reports, and it is hard to find any reporting within the financial service sector and amongst holding companies
However, for those reporting, environmental disclosure is strong. All of the companies analyzed cover environmental issues in some depth and some display excellent reporting on the following: environmental policies, management systems, global coverage, board-level responsibility for environmental issues, quantitative emission data and quantitative reduction targets
Reporting on human rights is mostly ignored, with disclosure on the issue being non-existent or superficial. Many commentators also find a worrying imbalance between the treatment of workers in South Korea and the treatment of the company's employees in overseas subsidiaries
Most companies disclosed on at least three indicators relevant to corporate governance. However, on the issue of separation of chairman and CEO, only five companies met this challenge, a pattern similar to that found at other large Korean companies
Korean companies exhibit poor reporting of policies on political donations, which is a corruption issue very specific to Korea, where 'facilitation payments' to bureaucrats have emerged as a new form of bribery. Each of the 10 companies analyzed disclosed some information on their anti-bribery activities, but few disclosed political donations.

Based on the report's findings, the groups recommend that Korean companies begin to incorporate more systematic stakeholder involvement into their ESG strategies, monitor, audit and report social performance, and disclose political contributions.

Created in 2009, the EMDP Korean team was the first Asian team to come together under the EMDP and is under the leadership of two co-leads, Lauren Compere, Managing Director, Boston Common Asset Management, representing the overall project and Joo-wonPark, Executive Director of Korea CSR Research Service (KOCSR) representing the Korean partners. In addition, global supporting partners include global ESG research providers EIRIS and Responsible Research (Singapore), and Korean supporting partners include Eco-Frontier, KoSIF (Korea Sustainability Investing Forum), Korea Corporate Governance Service, Solability and Sustinvest.

"Over the years, while we have found some Korean companies responsive to global investor concerns on sustainability issues, including those we have engaged with directly, most Korean companies avoid direct engagement with shareholders on these issues," said Lauren Compere, Managing Director, Boston Common Asset Management and EMDP Co-Chair. "We hope that the unique collaboration of global and local partners represented by the EMDP Korean team will help us raise the bar for Korean companies on ESG disclosure and encourage them to more fully integrate shareholder engagement on these issues into their CSR practices."

Peter Webster, Executive Director at EIRIS said, "Strong and effective management of ESG issues can be used as a proxy for strong corporate governance and can also serve as an indicator of a company's overall management quality. Global investors need more systematic ESG disclosure from Korean companies to enable them to minimize their risks to earnings and derive long-term sustainable value within their holdings."

"We are delighted to be collaborating with our global partners by providing them, through our ESG research, the information they need on current ESG disclosure trends to push Korean companies to improve their sustainability disclosure," said Joo-won Park, Executive Director of KOCSR. "We hope that the ESG Scorecard which we developed will be helpful for other EMDP country teams for their baseline study."

Click here to download a full copy of the research.

Meet the YourEthicalMoney.org web team at the UK Aware Green & Ethical Lifestyle Show at London Olympia

EIRIS will be exhibiting its YourEthicalMoney.org consumer website on sustainable finance at the UK Aware Green & Ethical Lifestyle Show this coming Friday 16 and Saturday 17 April 2010 at London Olympia.

YourEthicalMoney.org provides free, independent and unbiased information on all aspects of ethical money finance and is fast becoming the UK's definitive one-stop-shop for sustainable finance.

So far over 10,000 consumers and financial advisers have visited the website to learn about how and where their money is invested, search for green and ethical financial products, and find out how they can make a positive difference with their money.

Tickets for UK Aware's Green & Ethical Lifestyle Show are normally £15.00 at the door, but EIRIS can offer discounted tickets for only £6.00 as part of our participation in the event. Click here for further details.

Do drop by and say hello - we will be at Stand 77

Urgent change in corporate culture needed to tackle bribery

07 April 2010

New research published today into the activities of some of the world's biggest companies finds that the vast majority of them are failing to tackle bribery. In the UK many companies are unprepared for new legislation on bribery.

The study, conducted by London-based sustainability consultancy EIRIS, focuses on those companies which have operations in sectors and regions identified as being at highest risk from bribery. Of the 625 global businesses analysed, 85% lack adequate anti-bribery policies and 94% lack adequate management systems on bribery. Levels of transparency and openness on bribery are also extremely poor with less than 1% of companies adequately reporting on the issue.

EIRIS' research is published as the UK Bribery Bill continues to make its way through Parliament. If enacted, it will introduce new legislation making both companies and individuals criminally liable for a failure to prevent bribery. The bill proposes a defence where the company can show that it has implemented 'adequate procedures' to prevent bribery.

EIRIS' research shows that many UK companies remain startlingly ill-prepared for this new legislation. It finds that 56% of UK companies lack adequate anti-bribery policies, 78% lack the adequate management systems to tackle bribery, and none of them adequately report on the issue.

Key findings:

Corporate failure to tackle bribery on a global scale. Approximately one third of the 2000 companies listed on the FTSE All World Developed Index have a high exposure to risks linked to bribery and corruption, but one company, Terna (Italy), achieved an advanced assessment for its approach to bribery in EIRIS' analysis - a reflection of the company's sophisticated anti-bribery policy and extensive disclosure.
Companies in the oil and gas sector display the most advanced response to bribery. Possibly a result of the close scrutiny this sector has faced from civil society groups, investors, regulators and other stakeholders.At the other end of the scale real estate is the high risk sector which displays the poorest performance on bribery.
Companies which are more highly exposed to bribery are more aware of the risks they face and are doing more to address these risks than those companies that are less exposed.
Investors can play a crucial role to play in shaping the anti-bribery agenda through their engagement with companies, rewarding good practice and highlighting areas of concern.

Evidence suggests that specific country regulations and stock exchange listing requirements are having a positive impact in encouraging more companies to counter bribery. In the US where companies are required by the Sarbanes Oxley Act to implement a code of ethics for relevant staff and whistle blowing procedures, 52% of North American companies are assessed by EIRIS as having an intermediate assessment for countering bribery risks. No North American companies are assessed by EIRIS as showing no evidence of tackling bribery.

This is in stark contrast to other companies based in countries which lack relevant legislation on bribery such as Hong Kong and Singapore where nearly half (49%) of companies fail to display any evidence of taking significant steps to counter bribery.

Robert Barrington, Director of External Affairs at Transparency International UK, said 'Corruption risk is increasing for almost all companies - and therefore their investors. Throughout the world, the legislative framework is tightening and efforts at enforcement have been stepped up, most recently reflected by the Bribery Bill in the UK. Global trading and markets have brought much greater exposure to corrupt environments than in the past, but most companies are ill-equipped to deal with this challenge.'

Sachi Suzuki, report author and Research Analyst at EIRIS, said 'It's clear that a new approach to bribery is needed. UK companies must do much more if they are to avoid falling foul of new bribery rules which could be enacted before the next election. Corporate failings on bribery of this scale pose significant risks to investors and leave companies exposed to risks of unlimited fines, reputational damage, restricted access to markets and difficulties in raising capital.'

Click here to download a full copy of the research.

EIRIS launches enhanced ESG proxy voting service

12 March 2010

London-based responsible investment research house, EIRIS, has launched an ESG proxy voting service. The new proxy voting service provides investors with ESG-specific voting recommendations for their investments.

The service supports investors through all phases of voting activity and provides ESG voting recommendations, support for investor engagements and assistance with reporting on voting and lobbying activity.

Mark Robertson, Communications & Development Manager at EIRIS said “Complementing proxy voting services with high quality, independent research on ESG issues from a dedicated specialist enables investors to build portfolios with expert input and advice to protect and enhance long-term value and returns. EIRIS’ new proxy voting service will enable clients to actively implement the UN Principles of Responsible Investment by incorporating ESG issues into ownership policies and practices (Principle 2) and by seeking appropriate disclosure on ESG issues (Principle 3)".

Click here to find out about the EIRIS Enhanced ESG proxy voting service.

European companies fail to link executive pay to ESG performance

26 January 2010

EIRIS has partnered with Eurosif (European Sustainable Investment Forum) to publish new research highlighting critical challenges and opportunities for companies and investors in relation to remuneration, incentives and long-term sustainability.

Research highlights and recommendations for investors and regulators include:

• 29% of FTSE Eurofirst300 listed companies have some commitment to linking remuneration to performance on environmental, social and governance (ESG) issues – although concerns exists around the extent to which performance targets are set as ‘soft targets’ thereby guaranteeing a minimum level of bonus
• Financial institutions account for 23% of the FTSE Eurofirst300 index but only 16% of financial institutions have an ESG-linked remuneration system
• Shareholders should engage with companies by voting against unacceptable remuneration packages and calling for and taking part in shareholder dialogue in determining remuneration policy,
• Regulators should promote active dialogue between companies and shareholders by legislating for a binding “say on pay” vote and setting appropriate guidelines to promote good remuneration practices and disclosure.

In the aftermath of the global financial crisis, remuneration policies and specifically the level of
bonuses of senior executives of companies and traders continue to hit the headlines. Investors and regulators have expressed concern that remuneration structures may have contributed to excessive risk-taking and are asking for a stronger focus to be placed on long-term reward schemes and sustainable growth.

Stephanie Maier, Head of Research at EIRIS said “As calls from investors, regulators and
NGOs to link extra financial ESG issues to executive remuneration increase, our research
shows that relatively few European companies are currently doing so. Furthermore,
approximately half of the companies that link remuneration to ESG issues do not clarify which
ESG areas are linked to the remuneration. ESG targets should be quantified, time-bounded,
verifiable and stretching.”

Matt Christensen, Executive Director of Eurosif, said “ESG issues are increasingly recognised as being linked to a company’s long-term financial stability. It is therefore critical that ESG concerns be integrated into a company’s business strategy, including directly in their remuneration guidelines.”

The report was presided over by a steering committee of financial analysts and foundations to
debate the issues and develop concrete ideas for recommendations going forward. The steering committee included representatives from CM-CIC Asset Management, Ethos Foundation, Groupama Asset Management, Henderson Global Investors, MACIF Gestion, PhiTrust Active Investors, Robeco and Société Générale Gestion.

To download a full copy of the research report click here.