Investors demand access to sustainable projects

By Alice Ross
Published: April 1 2009 12:40

A group of institutions has called on the government to give private investors more opportunities to invest in ethical projects.
Fund management groups and ethical investors wrote a joint letter to Gordon Brown, prime minister, on Wednesday to argue that any economic recovery plan should include sustainable investment.

Paul Abberley, chief executive of Aviva Investors London, said: “Green investment isn’t only for governments. Many private investors also want the opportunity to invest in green projects such as low-carbon energy and energy efficiency.”
The group is calling on the government to design financial instruments that will encourage investors to participate in ethical investment and ensure that the private sector plays a role in funding sustainable investment projects. This could include tax incentives for private sector investment.
The group said private sector investment had a “major role” to play in any economic recovery plan, arguing that investment in low-carbon energy can create jobs and increase energy security.
“There is now an opportunity to construct stimulus packages in such a way as to lever in funding from institutional investors who act on behalf of millions of shareholders, pension fund members and savers,” the letter said.
The letter comes as world leaders gather in London for the G20 meeting this week, in which an attempt will be made to carve out a solution for the global economic turmoil.
Signatories included Paul Abberley, chief executive of Aviva Investors London, Alain Grisay, chief executive of F&C Management and Edward Bonham-Carter, chief executive of Jupiter Asset Management.
A number of ethical funds have sprung up in recent years to meet increased investor demand for sustainable investment. These include funds that simply avoid certain areas such as armaments or tobacco, as well as those that actively invest in areas such as new climate change technologies.
Ethical funds underperformed for much of last year due to the double whammy of avoiding oil stocks, which did well in the first half of 2008, and being overweight in financials, which did badly in the second half.
However, many ethical funds are in the top quartile for performance over the past year against their non-ethical peers. Henderson Global Care Growth, Schroder Global Climate Change and F&C Stewardship International all have decent relative performance, according to Morningstar figures.
Copyright The Financial Times Limited 2009