Premier Ethical A Inc (OEIC/Unit Trust)
SRI / Ethical Overview
The Fund focuses on companies that the fund manager believes contribute to the requirements of a sustainable, civilised society and whose products or services are of widespread benefit to the community.
These companies must adhere to the ethical criteria set by an independent Committee of Reference, which consists of highly respected academics and clerical representatives who oversee the Fund. They are responsible for establishing, reviewing and amending where necessary the ethical policy, which governs the selection of potentially suitable investments for inclusion in the Fund, as agreed with Premier Asset Management
SRI / themed / ethical assets under management – overview
- Fund Size (GBP): £181.4 million (as at 30.06.2018)
- Total value of SRI/ethical/environmental/ social/ environmental or sustainability themed funds: £181.4 million (as at 30.06.2018)
- Total value of assets covered by any additional ESG or responsible ownership policy: £181.4 million (as at 30.06.2018)
- Total assets under management: £6.8 billion (as at 30.06.2018)
SRI Policies (Primary strategy in bold)
- Environmental policy Find investment funds with environmental policies - ie that consider issues such as pollution, climate change, resource management, environmental impact. This will include options from all of the different SRI Styles, including funds where their core strategy is to focus on other areas such as ethical funds. See fund information for fund specific policy details.
- Limits exposure to carbon intensive industries Find environmental, sustainable investment, ethical fund and other options that aim to significantly reduce or limit exposure to carbon intensive industries (ie sectors which are major contributors to climate change). Funds vary - strategies may involve excluding sectors such as coal, oil & gas, mining or airlines - or may indicate a 'best in sector' approach is taken. See fund literature for details.
- Measures positive impacts Find funds that measure the positive effect of their investment decision making on society and/or the environment. (This may involve eg carbon saved or jobs supported.) Managers aim to quantify the benefits they deliver (relative to other strategies or other benchmarks) to ensure they are delivering positive benefiting. This is a new and evolving area. See fund literature for information
- Sustainability policy Find fund options that consider issues relating to the sustainability agenda (e.g. resource management, environmental impact, climate change and/or social issues such as equal opportunities, human rights and adherence to recognised codes). This will include funds from all of the different SRI Styles. See fund information for explanations of the different strategies.
- Ethical policies Find funds with 'traditional' ethical investment policies. These typically focus on avoiding companies that are involved in the armaments industry, tobacco, gambling and/or pornography. Options will include funds where their core strategy or style may be to focus other issues - like sustainability or the environment, not just 'ethical funds'. Strategies vary significantly. Check fund literature for details.
- Social policy Find fund options that consider social issues (e.g. human rights, labour standards, equal opportunities, child labour and adherence to internationally recognised codes such as the UN Global Compact). This will include funds in most of the different SRI Styles as this is considered a core issue. See fund information for detail.
- Governance policy Find fund options that have policies that relate to corporate governance issues such as board structure, executive remuneration, bribery and/or corporate corruption. These funds will typically avoid companies with poor practices.
- Animal testing exclusion policy Find ethical investment options that avoid companies that are involved in testing their products on animals. Ethical fund strategies vary - some exclude all companies that test on animals, others allow companies that test for medical purposes or where required by law. Read fund details for fund specific information.
- Tobacco production avoided Find fund options that exclude manufacturers of tobacco (or related) products. This typically relates to ethical funds however funds from other SRI Styles commonly avoid this area also. Strategies vary and funds may invest in retailers of such products (e.g. supermarkets or hotels.) See fund information for further information.
- Armaments manufacturers avoided Find ethical fund (and other SRI) options that avoid avoids companies that manufacture products intended specifically for military use. Fund strategies vary - particularly with regard to non strategic military products. Read fund literature for specific details.
- Coal, oil &/or gas majors excluded Find sustainable investment and ethical fund options that avoid significant involvement in coal, oil and/or gas producing companies. Funds vary. See individual fund literature to confirm details.
- Climate change / GHG policy Find sustainable investment and ethical fund options that pay significant attention to climate change related issues such as greenhouse gas/carbon emissions. Strategies vary, see fund literature for individual fund information.
- Invests in clean energy/renewables Find ethical, sustainable investment and other environmentally aware fund options that aim to invest in companies in the clean technology and renewable energy sectors. Fund strategies vary. Some funds may have limited exposure to this area, others may have significant exposure. Check fund literature for details.
- Alcohol production excluded This filter helps you to find ethical funds - and other options - that avoid investment in alcohol production. See fund literature for further information.
- Gambling avoidance policy Find ethical fund options (and other options) that avoid companies with significant involvement in the gambling industry. See fund policy for details.
- Pornography avoidance policy Find ethical fund option - and in some cases other options - that avoid companies that derive significant income from pornography. See fund details for further information.
- Human rights Find funds that consider human rights practices when approving companies for investment. Such funds will require decent standards of human rights to be demonstrated - which typically means adherence to international norms as a minimum standard.
- Child labour exclusion (new) Find funds that have policies in place that ensure they do not invest in companies that employ children.
- Water / sanitation policy (new) Find funds that have policies that focus on the the water industry and/or sanitation.
- Resource efficiency policy or theme (new) Find funds that have a a policy or theme that relates to managing natural resources more efficiently
- Sustainable transport theme or policy (new) Find funds that have stated policies or thematic investment approaches that relate to supporting more sustainable (environmentally aware) transport
- Positive social impact theme (new) Find funds that specifically state that they aim to deliver positive social (ie people related) impacts and/or outcomes
- Responsible supply chain policy or theme (new) Find funds that have policies or a themed that considers the responsible management of supply chain related issues (these may relate to employment, product sourcing, sustainability or other issues)
- Positive environmental impact theme (new) Find funds that specifically set out to help deliver positive environmental impacts, benefits or outcomes
- Positive selection bias Find funds where their main 'ethical approach' is to invest in companies that are considered to be positive/good or useful to people and/or the environment. The fund may also have negative avoidance criteria - see fund details to read more about fund strategies.
- Balances company 'pros and cons'/best in sector Find ethical funds and other options that consider both the 'positive' things companies do and the 'negative' things they do in order to make balanced, often complex decisions about where they might invest. Such funds often invest in the best/most ethical companies across most industries ('best in sector'), rather than excluding entire sectors. The fund manager may combine this with 'responsible engagement' activity to encourage better business practices. See fund literature for specific policy explanations.
- Sustainability themed Find funds where there is a significant emphasis on sustainability issues either as its primary strategy or as a core strategy that compliments other criteria. (This may apply to a number of different SRI Styles). Such funds will consider environmental and social issues when making stock selection decisions. Read fund literature for further information.
- Favours cleaner, greener companies Find funds that aim to nvest in companies with strong environmental policies and practices. This may mean it invests in smaller companies offering market leading environmental services or products and/or larger companies that are working towards the improved management of their negative impacts. Read fund literature for further information.
- Favours companies with strong social policies Find funds that invest in line with positive strategies that relate to 'people' issues - such as having strong human rights, labour standards and equal opportunities practices. Such funds are likely to invest in companies that have market leading standards with regard to employee and supplier practices. Read fund literature for further information.
- Faith friendly Find funds that have attributes that commonly suit the aims of investors of faith - although they may not be specifically marketed as being only for religious investors. Strategies vary (as do investor aims). Read fund literature for further information.
- Aims to generate positive impacts Find funds that aim to help deliver positive social or environmental impacts or outcomes through their investment decisions - which typically involves holding companies that are viewed as being necessary or beneficial. Strategies and approaches vary. A small number of funds have recently started to measure outcomes (see 'Measures Impacts' in the Policy filter). This is a new area - so most funds do not do this yet. See fund literature for further information.
- Available via an ISA Find funds that are available via a tax efficient ISA product wrapper
- Clean energy themed Find funds that in clean technology / clean energy companies. See fund information for further details.
- Responsible ownership / stewardship policy (new) Find funds that have a policy that sets out what they do with regard to responsible investment ownership - also known as 'stewardship'. This typically relates to issues such as dialogue with companies and shareholder voting.
- ESG integration strategy (new) Find funds that factor in 'environmental, social and governance' issues as part of their investment decision making process. (These typically relate to improved risk management.)
- Combines norms based exclusions with other SRI criteria (new) Find funds that make significant use of internationally agreed 'norms' (eg United Nations Global Compact - UNGC - or the UN Sustainable Development Goals - SDGs) as part of their investment selection process ALONGSIDE additional SRI criteria such as positive or negative stock selection policies and/or stewardship strategies.
- Combines ESG strategy with other SRI criteria (new) Find funds that have an ESG strategy (which is typically focuses on avoiding companies that post environmental, social or governance related risks) with additional criteria such as positive and/or negative screens or engagement/stewardship strategies.
- Invests in social housing (new) Find funds that have significant investment in social housing or similar assets
- Employ external oversight or advisory committee (new) Find funds that have a external committee that helps steer or advise fund managers on SRI policy or strategy related issues. These people may be paid for their time but are not employees of the fund manager.
- External committee has veto powers Find funds that employ an external committee (ie not company employees) that has power to veto (ie overrule) fund managers stock selection decisions. (This would typically mean they can tell a fund manager to not buy (or to sell) a specific investment when they consider it necessary to do so. Eg if they feel a company is inappropriate.)
- ESG/SRI engagement Find funds and fund management companies that actively encourages higher 'environmental, social and governance' and/or 'sustainable and responsible investment' practices amongst investee companies - when positive change is aligned with the best interest of investors. This may apply to a single fund or a group of funds. Read fund literature for further information.
- Vote all* shares at AGMs/EGMs This fund manager votes or aims to vote all* the shares they own at Annual General Meetings and Extraordinary General Meetings. A commitment to voting shares is a key indicator of 'responsible share ownership' - where fund managers consider - and express their views on - the key business issues effecting the companies they part own. (*Allowance is made for exceptional situations such as when shares are in the process of being sold.)
- In house responsible ownership/voting expertise Find fund / fund management companies where there is in-house expertise that enables the fund manager to make their own decisions on issues such as shareholder voting, setting of in-house guidelines - for example - particularly with regard to environmental, social and governance (ESG) issues.
- UK Stewardship Code signatory Find fund managers that are signatories to the FRC UK Stewardship Code, which sets out a framework for constructive investor / investee relations where fund managers are encouraged to behave as responsible 'company owners'.
- Publish full voting record Find fund management companies that publishes a full record of how they vote at AGMs and EGMs. This information is publicly available.
- Boutique/specialist fund manager Find options offered by smaller, more specialist fund management companies with a significant (or entire) emphasis on sustainable, responsible, ethical, ESG or responsible ownership related investment strategies. Note - strategies vary significantly. Check fund manager supplied links for further information.
- UKSIF member (new) The fund management company is a member of UKSIF - the UK Sustainable Investment and Finance association
- Encourage board diversity eg gender (new) Fund managers encourage the companies they invest in to have more diverse board structures (eg more women on boards)
- Encourage responsible corporate taxation (new) Fund management company is working with the companies it invests in to encourage more responsible corporate taxation (new)
- Employ specialist ESG/SRI/sustainability researchers (new) The fund management company directly employs specialist ESG/SRI/sustainability researchers or analysts
- Full SRI policy information available on request (new) Information on all selected filter options will be supplied by the fund manager if you ask them to do so
SRI / Ethical Policy
Encouraging the positive
The Fund looks to invest in companies involved in products and services that aid environmental sustainability, including mitigating climate change. This would include companies involved in:
- pollution control or monitoring
- industrial efficiency to save energy
- supplying energy saving services either in the home or in industrial applications
- process control equipment to save resources in the manufacturing process
- sustainable transport provision
- low carbon energy production and renewables
The Fund will also look to invest in companies whose products and services have an emphasis on improving individuals’ basic standard of living rather than focusing on luxuries.
This could include:
- medical and healthcare companies
- companies supplying educational or training services to enable individuals to enhance their quality of life
- companies that embrace the concept of the living wage
- companies involved in the protection and provision of water supplies
- companies supplying specialist equipment that have a health and safety application
Excluding the negative
The Fund will endeavour to avoid investing in companies with a negative social and environmental impact, including those:
- who have a major business in the production of goods or services for weapons of mass destruction
- with more than 10% of turnover from the sale of tobacco products
- which have a significant involvement in gambling
- whose major business is printing, publishing, wholesaling or broadcasting violent or pornographic material
- that promote the irresponsible use of alcohol
- which are consistently involved in breaches of international norms of behaviour in regard to pollution and environmental damage
- that have a record of poor labour relations: engage in forced, compulsory or child labour or fail to meet international standards in their overseas operations
- that target children with inappropriate advertising or sexualise children within their advertising
- that use animals for testing of products other than for required medical products and procedures
- that consistently pursue aggressive tax avoidance policies
- which derive a substantial percentage of their revenue from the extraction, mining, processing and production of carbon emitting fossil fuels.
The Premier Ethical Fund is bound by the ethical criteria set down by an independent Committee of Reference, which determine areas that the Fund should both target and avoid. The Committee of Reference consists of highly respected academics and clerical representatives who oversee the Fund’s Ethical Policy. They are responsible for establishing, reviewing and amending where necessary the ethical policy, which governs the selection of potentially suitable investments for inclusion in the Fund, as agreed with Premier Asset Management.
The fund manager will screen for the ethical qualifications of a company using Ethical Screening, an independent ethical financial advice service provider.
The ethical screen identifies three categories of stocks: positive, neutral and negative. The Fund will only invest in companies that are considered positive or neutral, but will avoid negative companies. Positive stocks are judged as likely to have a positive ethical impact, for example by aiding environmental sustainability or improving an individual’s basic standard of living. Neutral stocks are not expected to have a negative impact but are unlikely to have a positive impact.
- Approximately 70 stocks with market capitalisation above £350m meet the positive screening criteria
- Approximately 80 stocks are excluded
- The rest are classed as “neutral”
An ethical screen inevitably leads to an emphasis on certain sectors and a bias away from others. However, the fund manager will strive to maintain diversification within these parameters to ensure the Fund is balanced and offers the potential to add value in different market conditions.
Beyond the ethical screen, the Fund invests according to the manager’s established stock selection process. He utilises his extensive experience as an investor to focus on the following key company characteristics:
- Quality – These companies are expected to have high and consistent return on capital employed, reliable, long-term dividend growth and sound balance sheets.
- Value – While no fund manager will admit to buying a ‘bad-value’ stock, many cheap companies often remain that way. The manager seeks genuine, long-term value, where a company’s growth prospects are not sufficiently factored into its share price. The fund manager aims to buy at the right price, based on a robust analysis of various criteria, including dividend cover and growth.
- Momentum – The fund manager will also prioritise companies that are seeing share price and earnings momentum. Revisions to analyst forecasts may show reasonable companies becoming good companies and improving earnings.
Resources, Affiliations & Corporate Strategies
The fund manager uses a combination of proprietary research, internal resources and external research and tools as part of his investment process.
Internal resources: The fund manager is able to call on the expertise and experience of Premier’s team of UK portfolio managers, equity analysts, sector specialists, global equity managers and Fixed Income team. A dedicated and experienced dealing desk executes all trades.
External resources: The investment team carefully selects and monitors a number of sell side analysts to provide company, sector and macro research. The Broker Committee, chaired by the Chief Investment Officer, meets quarterly to score and rank research and execution providers. Additional research tools include Bloomberg, Quest and Ethical Screening.