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Is there any reason for an ethical fund should still be holding BP shares?
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Rich Harris (Citywire)
Posted: 18 June 2010 10:47:46(UTC)
#1

Joined: 08/06/2010(UTC)
Posts: 126
While most so-called socially responsible or ethical funds won' invest in porn or weapons, the industry is split when it comes to oil and mining companies.

The argument seems to be that since these companies cause the most harm to human life and the environment there is a clear reason to own their shares and have a say in their business.

Green charities too own shares so they can go to shareholder meetings and raise awareness of their concerns.

NGO's also engage with companies so they get a say in ensuring projects cause the least possible damage.

But when companies publish tomes and tomes about how responsible they are and greenwash their ads but do little to change what happens on the ground isn't there a point at which the fund managers of these funds have to just walk away?

And should these funds be doing more to advertise their concerns?
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Rich Harris (Citywire)
Posted: 18 June 2010 13:53:04(UTC)
#2

Joined: 08/06/2010(UTC)
Posts: 126
Have to say I'm a bit ambivalent on the whole subject of shareholder activism. Surely the purpose of shareholder engagement is preventing management from destroying value - Robin Geffen rallying the troops against Prudential's AIA bid would be a good example - rather than promoting a particular ethical or environmental cause (which others may disagree with).

Not saying those causes shouldn't be promoted, just that company AGMs are the wrong forum.

So I'm in the 'fund managers should walk away' camp but for different reasons. I just don't see the logic in buying a company (and therefore lowering its cost of capital etc.) that does something you fundamentally disagree with.

But as for whether oil companies are ethical - without oil the cost of living would be much higher than it is, and the quality of life would (in aggregate) be lower. So on balance, given their contribution to the sum of human happiness, I'm forced to conclude that they are ethical - at least until the alternatives become viable. I realise how that sounds!

Interested to hear other perspectives though.
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