Every year, we send a ‘quick fire survey’ to our Thomas and Thomas ‘Pro-Ethical’ clients. This is their chance to tell us where their priorities lie when it comes to ‘screening’ investment funds.
In an ideal world, we would see nothing that would cause any potential concern within our client portfolios. However, the reality is that we need to prioritize the areas that might cause the most concern when building our Pro-Ethical portfolios.
The good news is that money talks!
We know that collective priorities can be fed back to the fund houses that we use. This enables us to bring some pressure to bear on any fund managers who are not screening things in the way that our clients would want.
Just to remind everyone; there are two types of screening – Negative and Positive. We believe fully in the very unfashionable and uncompromising ‘Negative’ screen approach – before then adding in the ‘Positive’ layer. Many investment funds and advisers will seek to move quickly past negative screening – we don’t feel this is an option.
To this end, we conduct a full negative screen on every fund that our Pro-Ethical clients hold within their portfolios every single quarter without fail. We carefully check that the fund managers are publishing their negative screening policies – and that these definitely include the areas of greatest collective importance to our clients.
This year, we sent out 89 ‘invitations’ to our Pro-Ethical clients with a link for them to follow in order to add their votes. Each vote also allowed comments boxes for our clients to give us even more views in regards to these highly important topics.
We asked clients what areas they would most want to avoid (negative screen) such as: Alcohol, Tobacco, Animal Testing, Pornography, Poor Human Rights, Non Sustainable Timber, Nuclear Power, Arms, Gambling, Genetic Engineering, Intensive Farming and Fossil Fuels.
This year, our clients collective top five Priorities (in order) were:
Poor Human Rights
Pornography
Animal Testing for Cosmetics
Tobacco
Gambling
Our clients were not so concerned about Alcohol or Nuclear Power as an area to strictly ‘Avoid’. However, there were still votes in these areas. Interestingly, these areas gained more votes in the ‘somewhat important’ category.
Notably, Fossil Fuels had fallen down to 10th most important. There were also some ‘risers’ such as Non Sustainable Timber which became more important to clients than previous years.
On the Positive Screen section, we could see ‘Ocean Waste’ and ‘Pollution’ as again very important to our clients in terms of wanting to invest in companies that did more to try and alleviate these issues. Climate Change was third with Social Housing in fifth place.
The comments were again fascinating! The most common theme this year was the conflict in interest. For example, several clients wrestled with wanting to support EV cars – whilst appreciating that the batteries might be made at the expense of poor human rights. These are important topical issues that we often debate within the office when we are building and maintaining these Pro-Ethical portfolios for our treasured clients.
My sincere thanks to all of you who managed to complete the survey. Your views are vital in shaping our Thomas and Thomas Screening Policies for 2024.
As ever, I am always here if you want to chat through anything that came up in the Survey or this article. I have also put together a full response document if anyone would like a copy.
My very best wishes and here’s to letting the money do the talking!
Darren
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