- Not black and white. Very few ethical issues are black or white – there are almost always shades of grey – or green. Clients should be advised that different funds will interpret issues differently.
- All companies great and small. There is no ideal size of company for all SRI investors to support. Smaller companies often have interesting stories to tell and may lead change, but for our lifestyles to become more sustainable bigger companies need to be encouraged to change too and many of them are. Smaller companies are also more difficult for large funds to invest in.
- Fingers in more pies. Larger companies tend to be more diverse than smaller companies – and are more likely to do things that some clients don’t like – try to manage clients’ expectations. This is why there are more larger cap companies in ‘Balanced Ethical funds’ than ‘Traditional Ethical funds’ as the former can take an ‘overall’, ‘on balance’ view of a company.
- No one’s perfect. Most companies have positive and negative attributes – no company is entirely ethical or unethical. Remember to consider what companies actually do as well as how they do it and expect companies to make mistakes sometimes. (Be aware – some people will disagree with this view!)
- Funds are not a homogeneous mass. Different fund managers have different policies and investment aims, even within similar looking groups or Styles. Expect diversity.
- There are many different ways to influence a company. Companies may respond best if they know they are excluded from some SRI funds, included from others and yet a further group of investors encouraging them to change. For some companies excluding them from ethical funds reduces the pressure put on them to improve – which may at odds with the aims of many ethical investors! No single approach works all the time.
- Get engaged. Don’t forget ‘engagement only’ as an option if other SRI funds are not what a client is looking for or are not suitable.
- Don’t ask won’t get. Always feel free to ask questions of product providers, fund managers and others in order to gain the information you need. A lack of queries lulls people into thinking interest is low!
- Client’s aims – not yours. Try to keep your personal views out of the investment recommendation process. An adviser’s role is to represent their client’s view not their own.
- Keep up to date. Read up on sustainability issues – they are high profile and a common strand across most areas of SRI. Think through how current news items relate to the SRI agenda. What is in the news this week that you might use to ‘bridge’ a discussion with clients about green and ethical funds?