Nice People Thread No. 15, a Cyber Summer

Generali

bugslet wrote: »

I take it you don't invest in a company that is deemed unethical? I used to bank with the Co-op then they started getting all ethical which just plain annoyed me and secondly they didn't seem to mind having me for a customer, which seemed plain hypocritical.

DQWD:

We do a lot of different things.

I work for the investment arm of a big financial services company by Aussie standards and I help look after a bunch of stuff part of which includes helping run the biggest ethical fund in Australia.

The ethical fund doesn't invest in companies that make a substantial amount of their revenues from things like making alcohol or cigarettes or pron or armaments and others.

We also have a list of companies that use fossil fuels in a way we feel able to support. A lot of that is burning brown coal to make electricity or producing CSG in large quantity.

Then we have a separate list of companies we don't invest in because we simply don't like what they do. That is pretty short (20-30 companies) and we do have to work hard to ensure that it doesn't simply reflect The Guardian op ed page.

We have this fund because some people want to invest without buying into companies that make cluster bombs or enslave children. We track our benchmarks (post fees) pretty well in fact we slightly exceed them on a five year view.

It's a very interesting area and isn't just about cuddling a tree and balls to the client. We have a very engaged client base and it really pleases me that we can meet the twin aims of making our clients richer and perhaps making the world a slightly better place.

vivatifosi

Interesting conversation Gen. As a pension fund trustee of a small fund (c £20m) this is something that concerns me too, particularly armaments. Being small, you can really only buy off the shelf to be cost effective, as you know. Having something bespoke is more of a dream. We are invested in index tracking funds, DGFs, LDIs, a bit in commercial property, obvs bonds/gilts, and then some very small ETFs for metals(size of investment rather than size of fund).

The big challenge for someone like me is understanding some of them. I don't like feeling bamboozled into something, especially as a steward of other peoples' money. It took ages to go into LDI s as I wouldn't until I understood them. I'm still wary of derivatives tbh.

Incidentally, one of my old lecturers said look at where CSF sits in an organisation if you want to see how ethical they are. If they live and breathe it, they are unlikely to have a small tobacco plant hidden somewhere. Mind you, that was in the early 2000s. Things have probably become more sophisticated since then.

bugslet

I do get it gen, but unless I put myself out of business, I don't have the luxury of being that picky.

Though I was asked to shift expanding ammo, which I don't have an issue with, but some of it was used for big game hunting, which I didn't like. Grouse and people, yes; elephants, no. Please don't ask me to explain the hoops my mind jumps through to arrive at that conclusion!:o

Generali

vivatifosi wrote: »

Interesting conversation Gen. As a pension fund trustee of a small fund (c £20m) this is something that concerns me too, particularly armaments. Being small, you can really only buy off the shelf to be cost effective, as you know. Having something bespoke is more of a dream. We are invested in index tracking funds, DGFs, LDIs, a bit in commercial property, obvs bonds/gilts, and then some very small ETFs for metals(size of investment rather than size of fund).

The big challenge for someone like me is understanding some of them. I don't like feeling bamboozled into something, especially as a steward of other peoples' money. It took ages to go into LDI s as I wouldn't until I understood them. I'm still wary of derivatives tbh.

Incidentally, one of my old lecturers said look at where CSF sits in an organisation if you want to see how ethical they are. If they live and breathe it, they are unlikely to have a small tobacco plant hidden somewhere. Mind you, that was in the early 2000s. Things have probably become more sophisticated since then.

We are lucky enough to be big enough to be able to impose investment strategies and ban particular names from what we invest in but then our fund is over £1,000,000,000 in size. You realistically need to be about £50,000,000 before you can start to ask a large scale investment manager to be able to screen investments out.

AFAICS, ESG meets one of the fundamental terms of a Warren Buffet investment: are you going to invest in a well run (G/governance) company or a badly run one?

We do just fine in terms of how we stack up against our non-ESG focused competitors, in fact we outperform most of them ex-fees.

There seems to be this weird idea that there is a morally positive choice when you invest where you don't invest into child slaves and then a morally neutral one where you do invest in child slaves. Both are moral choices. Personally I'd rather work an extra month or two (or for exactly the same length of time in the fund I help run) and not have the blood of Rana Plaza on my hands. Other people may prefer enabling the marketing of known carcinogens and the production of cluster bombs of course.

Either way you are making a choice.

Generali

bugslet wrote: »

I do get it gen, but unless I put myself out of business, I don't have the luxury of being that picky.

Though I was asked to shift expanding ammo, which I don't have an issue with, but some of it was used for big game hunting, which I didn't like. Grouse and people, yes; elephants, no. Please don't ask me to explain the hoops my mind jumps through to arrive at that conclusion!:o

Of course one of the problems of ethical investing is whose ethics get used? I have no problem with big game hunting having met a provider of elephant shooting and now understanding it.

We have a series of ethical policies that we use to guide our investments and then have a committee made up of investors and portfolio managers (and me!) that we use to black and white the grey areas.

I guess one of the things we do as a fund is we make it more expensive for companies that make decisions we believe are unethical to follow through.

To use your example, if mainstream banks and investment houses refused to lend to or buy equity in companies that transported expanding ammo then you would no longer suffer a competitive disadvantage if you stopped transporting those loads. In fact at current costs vs revenues you would have an advantage.

People wanting to transport expanding ammo still could but at increased cost and perhaps that increased cost would represent the way that society views that product.

As consumers in a capitalist society we vote with our money and there are no ethically neutral choices although there are many ethically complex ones.

SingleSue

I invest in my children and their education over and above what is normally done by parents in my socio economic bracket.

Mine were the first in the street to go to university in the 18 years we have lived here, now others are thinking it is possible.

Generali

PasturesNew wrote: »

I invest in tobacco companies .... 15x a day

And that is the ethical reason we don't.

If you could buy them on high days and holidays then we'd probably invest. That you can't means we can't, especially given that the addiction means there's a 50:50 chance a smoker will die of smoking..

bugslet

Generali wrote: »

There seems to be this weird idea that there is a morally positive choice when you invest where you don't invest into child slaves and then a morally neutral one where you do invest in child slaves. Both are moral choices. Personally I'd rather work an extra month or two (or for exactly the same length of time in the fund I help run) and not have the blood of Rana Plaza on my hands. Other people may prefer enabling the marketing of known carcinogens and the production of cluster bombs of course.

Either way you are making a choice.

Whilst not disagreeing with you, it gets complicated to make moral choices on the ground. A friend of mine is in a reasonably senior position in M&S on the clothing side. When the Rana Plaza disaster happened, I asked if they had any clothes manufactured there. They didn't, though they did in other Bangladesh factories. I have no reason to believe that they don't pay a fair rate for the clothes and therefore the workers, but I don't know, nor do I know anything about the safety for those workers. At one point M&S were discussing pulling out of Bangladesh and is that helpful to Bangladeshi workers?

I had a bit of a moment at the start of the year about only buying British goods ( excluding food ) - and it's hard work at times, not to mention expensive and extremely limiting as far as choice goes.

I made peace with my industry ( you know, mowing down wildlife with gay abandon, totally responsible for child asthma in the UK and simultaneously thundering through villages and lumbering up hills for no reason at all, just out for the fun of it ) and the specific sector I work in, which tends to attract protestors.

You've got me thinking there now Gen. I'd close the firm before I'd move livestock, but I'd move cheese - as someone that eats little animal products, then where's the logic in that? Goes away to ponder.....

Generali

SingleSue wrote: »

I invest in my children and their education over and above what is normally done by parents in my socio economic bracket.

Mine were the first in the street to go to university in the 18 years we have lived here, now others are thinking it is possible.

Anyone that earns over £50 a week has a pension scheme mandated by law in Aus. Kids working in Maccas or working on a Saturday in their local caf! probably have a pension.

SingleSue

In other news, youngest is happy. At the start of the year he was absolutely gutted that his predicted grade was showing as Merit x 3 despite him achieving Distinction* x 3 in his completed units.

It has now updated to Distinction* x 3.

This version of youngest is such a different one to the Academy version of youngest, he has become very focused on what he has to do and is moving heaven and earth (although he doesn't believe in them) to get there.