E FICIENCIA Y RENTABILIDAD

Table B1: Summary of financial sector sustainable development initiatives - Europe

Selection Criteria

Sector Description

Investment

in the UK £51.7 billion is invested in Socially Responsible Investments (SRI) the SRI market in the UK is expected to exceed £300 billion by the end of 2001 (PricewaterhouseCoopers, 2001) SRI in Europe is a mature market (The Allen Consulting Group, 2000) the UK Social Investment Forum’s survey found that 101 (59%) of the 171 funds, with collective assets of £302 billion, have asked their fund managers to adopt socially responsible investment strategies.

the UK ethical investment market grew by 47.7% between 1998 and 1999 fund managers have developed guidelines for reporting on social, environmental and ethical matters. These guidelines are intended to assist companies in addressing the concerns

Superannuation

it is not compulsory for individuals to contribute to a pensions fund (Fenech, 1999)

in 2000, the total pension fund market in the UK was approximately £800 billion of which £3.3 billion was invested in SRI

a recent study carried out by ERM, which involved surveying companies that represent nearly half of £800 billion in UK pension fund assets, revealed that 21 out of the UK's 25 largest pension funds intend to implement SRI principles (AMP Henderson, 2000)

Germany and France are currently looking at implementing legislation similar to the UK Pension Act which requires the disclosure of the extent (if at all) to which social, environment or ethical considerations are taken into

Credit and lending

banks have been looking at environmental issues since the early 1990s due to concerns over

environmental lender liability (Delphi, 1997).

Insurance and re-insurance

almost all European insurers offer insurance protection against liability for ‘sudden and accidental

environmental impairment’ (Swiss Re, 2000)

Germany and Finland have introduced a compulsory environmental insurance system (Delphi, 1997 & UNEP, 1999) the insurance industry is involved in the climate change debate and have been pro-active in their approach to global warming (e.g. Swiss Re, Munch Re) (Monash 2000).

Table B1: Summary of financial sector sustainability initiatives - Europe

United Kingdom

Companies Act 1985 s226(2)

– accounts must give ‘true and fair view’ of the affairs of the company.

– specific environmental disclosures should only be included if they are material to the understanding of financial statements and are not misleading.

Section 234

– requires a directors’ report to be prepared for each financial year that provides a fair review of the development of the business and outlines matters as set out in Schedule 7 which includes matters of a general nature, including changes in assets and issues that relate to the health, safety and welfare of the company’s employees.

Section 256

– this section is inserted to provide for accounting standards, that is, statements of standard accounting practice issued by such body or bodies as may be prescribed by regulations.

Financial Services Act 1986 Part IV s146

– general duty of disclosure of all such information as investors and their professional advisers would reasonably expect for the purpose of making informed assessments.

Section 201

– provides that directors are to secure compliance with any international obligations.

Listing Rules of the Council of the London Stock Exchange

– chapter 6 gives types of information generally required

– provides for a directors’ report which outlines the issues to be covered and includes any significant changes in the fixed assets of the company and an indication of any significant difference between the book value and market value of land.

General Principles

– currently no special rules in the UK dealing with environmental costs, liabilities and impaired assets

– normal accounting principles apply on cost of environmental measures, fines, penalties, damages, and loss through impairment of assets.

Company Law Review

– companies must ensure that their legal responsibilities towards the environment, employees and local communities are met. Internal policy, monitoring, management and reporting activities help to ensure that compliance is maintained. Corporate Governance has been high on the agenda in recent months due to the proposed revisions in company law, and the risk management approach promoted by the Turnbull Committee.

– the UK Department of Trade and Industry’s Company Law Review is analysing Directors’ duties and corporate responsibilities to stakeholders as a basis for legislation. Although this review is still in a draft format (it will be presented to Ministers in Spring 2001), recommendations are expected to include the requirement for an "inclusive" statement of directors’ duties "which require directors to have regard to all the relationships on which the company depends and to the long term as well as the short term implications of their actions". Companies should be required to produce an Operating Financial Review each year that outlines ‘the performance and direction of the business, including ... wider relationships, risks and opportunities and social and environmental impacts where these are relevant to an understanding of the performance of the business.’

Regulations covering all Financial sectors

Table B1: Summary of financial sector sustainability initiatives - Europe

European Commission

EC Fifth Environment Action Programme – section 7.4

– proposed measure for "Redefinition of accounting concepts, rules, conventions and methodology so as to ensure that the consumption and use of environmental resources are accounted for as part of the full costs of production and reflected in market prices. Such measures must include appropriate checks and controls so as to ensure market transparency and fair competition."

Commission of the European communities White Paper on Environmental Liability

– the White Paper sets out the structure for a future EC environmental liability regime that aims at implementing the polluter pays principle. It describes the key elements needed for making such a regime effective and practicable. Environmental liability is seen as a way of implementing the main principles of environmental policy enshrined in the EC Treaty (Article 174(2)), above all the polluter pays principle.

Directive of the Commission

– the aim of a community environment policy is to improve the setting and quality of life, and the surroundings and living conditions of the community.

A Communication on the Sixth Environment Action Programme of the EC

– this looks at improving the implementation of existing legislation, a community wide voluntary instrument, the eco-management and audit scheme. The Commission intends to pursue a ‘name, shame and fame’ strategy for selected pieces of legislation. The Community has recognised the importance of integration of environmental protection into other policies by the inclusion of the objective in Article 6 of the Treaty.

– the European Commission is to use financial markets and SRI to drive increased disclosure.

Regulations covering all Financial Sectors

Table B1: Summary of financial sector sustainability initiatives - Europe

the Turnbull Committee published its final guidance on internal control in September 1999. The Guidance promotes the identification and management of risk, including operational risk such as that relating to ‘health, safety and environmental, reputation and business probity issues.’ It forges the essential link between risk-based management and the achievement of business objectives and shareholder value. the Danish Social Ministry established the ‘S-Mark’ program which involved the government submitting

questionnaires to corporates and then awarding them a rating (‘S-Mark’)

(www.ethicalinvestor.com).

United Kingdom - Pensions Act 1995 (Amended July 2000)

Section 36(5) - trustees or fund managers to whom any investment discretion is delegated by the trustees are required to give effect to the principles contained in the statement of investment principles(SIP). A statement must be made on:

- the extent (if at all) to which social, environment or ethical

considerations are taken into account in the selection, retention and realisation of investments; and - their policy (if any) in relation to

the exercise of rights (including voting rights) attachied to investments.

Local Government Pension Scheme (Management and Investment of Funds) (Amendment) Regulations 1999

Regulation 7(7) – the fund manager must not make investments which would contravene the administering authority statement of investment principles.

France has developed an SRI related ‘Employee Savings Plan Bill’ (www.terranova.com).

NA individual European nations have put in place different environmental liability laws however Germany and Finland are the only nations to have introduced a compulsory

environmental insurance system (Delphi, 1997 & UNEP Geneva, 1999).

Regulations & Corporate Governance

Table B1: Summary of financial sector sustainability initiatives - Europe

Type of investments include:

environmental industry funds

– examples include German Focus, Hypo Eco Tech

best-in-class or eco-efficiency funds

– examples include Credit Suisse Equity Fund, Storebrand Scudder Environmental Value fund

environmental support funds

– funds donating money to financially support environmentally friendly companies

– examples include Swedish Banco Ideella Miljofond

sustainable growth funds

– invest in businesses that have a long term role in the transition towards sustainable development

ethically screened funds

– examples include United Charities Ethical, Abbey Ethical

environmentally screened funds

– examples include Eagle Star Environmental Opportunities, TSB Environmental Investor

Type of investments include:

socially responsible funds

– examples include Universities Superannuation Scheme, which is the third largest pension fund in the UK (£22 billion).

Environmental lending products include:

energy saver mortgages

– examples include Woolwich, Co-operative Bank

environmentally friendly investment loans

– examples include Barclays in conjunction with European Investment Bank, Natwest (Monash, 2000)

ecological or ethical banks

– examples include Ecology Building Society, Triodos Bank

(Hineterberger, 1998)

National Westminster Bank

– National Westminster Bank have made £50 M available for lending to businesses at cheaper than normal rates for environmental projects (Delphi, 1997).

Types of insurance products include:

sudden and accidental environmental risk cover

– provided in general liability policies – examples include Swiss Re

(Delphi, 1997)

accident insurance that supports environmentally friendly behaviour

– examples include Versiko

recycling insurance

– examples include Tomas Tenga (UNEP, 1999)

environmental damage insurance

– examples include Jan Pieter Six (UNEP, 1999).

Product & Services

Table B1: Summary of financial sector sustainable development initiatives - Europe

positive and negative screening tools as well as best of sector analysis, are typically applied to funds

analysts are using the services of independent environmental rating agencies to screen funds (e.g. ERI, Oko-Invest, SERM, Triumvirate, SAM) (Delphi, 1997)

SAM provides Dow Jones screening for the Dow Jones Sustainability Index the Ethical Investment Research Service (EIRiS) assesses corporate activity in 30 principles areas, including animal testing, gambling and greenhouse gas emissions. EIRiS predominately researches UK companies and provides information to UK based socially responsible investors. They are responsible for the FTSE4Good research.

Pensions Investment Research Consultants (PIRC) are starting to provide rating services on SRI (competing with EIRiS)

Sustainability Indices e.g. Dow Jones

Sustainability Index, FTSE 4 Good, Industries of the Future – NPI.

positive and negative screening tools as well as best of sector analysis, are typically applied to funds

National Provident Institution (NPI) offers passive and active SRI funds across the full range of pension products. (Note: NPI is part of the AMP Group) (The Allen Consulting Group, 2000)

Morley expects all FTSE 100 companies, in all sectors, to have robust processes to minimise damage to the environment. These companies are required to publish a

comprehensive environmental report. Where FTSE 100 companies do not publish such a report, and after consultation as to management intentions, Morley will vote against the resolution to adopt the report & accounts.

engagement rather than screening has become the preferred option amongst mainstream UK fund managers. This approach was championed by Friends Ivory Sime, a innovator in the UK.

49% of banks in Europe in 1997 required environmental due diligence on project finance (Delphi, 1997) assessments typically consist of a two or three tier approach, including the completion of checklists and detailed environmental information manuals (e.g. Deutsche Bank, Barclay Bank, Lloyds TSB) (Delphi, 1997).

Swiss Re has a general policy which requires the identification of environmental risks and the

consideration of ecological criteria in all relevant reinsurance transactions. Winterthur (Credit Suisse Group) is guided by an underwriting policy that specifically excludes the underwriting of exposed industries and projects (e.g. offshore oil exploration, nuclear plants)

re-insurance companies like Swiss Re and Munich Re have commissioned numerous studies on the impact of climate change on the insurance sector.

Analysis/ Screening Tools

Table B1: Summary of financial sector sustainability initiatives - Europe

stakeholders are concerned over the relationship between environmental and investment performance (Delphi, 1997)

main investor concerns include: – military - weapons

– nuclear power plants

– genetically modified organisms (Flatz, 1998)

– animal welfare (SustainAbility 2001) NGOs have been running member campaigns to raise the awareness of SRI (Amnesty International, Friends of the Earth)

NGOs and trade unions have been buying shares or getting institutional shareholders to sponsor shareholder resolutions. For example Greenpeace owns shares in Shell and international trade unions rallied to bring

resolutions at last year’s Rio Tinto meeting.

mainstream investors are typically interested in how effectively

companies are managing their social, ethical and environmental risks.

concern over the lack of transparency and disclosure of bank operations (AMP Henderson, 2000)

environmental NGOs are targeting investment banks over their involvement with environmentally damaging companies (Delphi, 1997) Three Gorges Dam – non government organisations targeted Credit Suisse on the grounds of environmental degradation, who as a result apologised and withdrew funding to China.

the insurance and re-insurance sector is concerned over the potential impact of climate change

concern over environmental liability is limited as most European legislation does not strictly outline the enforcement of environmental liability (Delphi, 1997).

Stakeholder Issues

Table B1: Summary of financial sector sustainability initiatives - Europe

Henderson Global Investors and Morely Fund Management have extended their corporate governance policies to include criteria on the environment, human rights, employee relations and community relations polices (AMP Henderson, 2000) Morely Fund Manger will vote against the financial statements at the annual general meeting if the company has not published an environmental report.

Henderson Global Investors and Morely Fund Management have extended their corporate governance policies to include criteria on the environment, human rights, employee relations and community relations polices (AMP Henderson, 2000) Morely Fund Manger will vote against the financial statements at the annual general meeting if the company has not published an environmental report.

Deutsche Bank and the Royal Bank of Scotland have developed internal environmental management programs (Hugenschimdt, 1997)

some banks have environmental management systems which are certified to ISO 14001, (e.g. Credit Suisse and Deutsche Bank) banks are reviewing their own internal environmental performance a key area of improved environmental performance has been in energy efficiency (e.g. ING Bank, Commerzbank) (Delphi, 1997) the Royal Bank of Scotland’s energy efficiency programs has resulted in savings of around £1 million per annum. Natwest Abbey National, Barclays, co- operativeABN AMRO and Prudential have prepared a public environmental report

in the UK in 1998 Lloyds TSB donated £30M (over 1% of its pre-tax profits) NatWest £14.3 M and Barclays £13.5M. (Jeucken et al, 2001) environmental management and reporting guidelines for the financial sector have been developed by the ‘Forge Group’ of financial institutions. the Swiss Bankers association have developed a web-site which outlines the experience gathered by Swiss banks when setting up their environmental management systems (www.unep.org).

56 insurance companies from the EU are signatories to the UNEP Insurance Initiative (www.unep.org)

CGU, ING, CGNU and Swiss Re have published public environmental reports. (Swiss Re, 2000)

TSB,CGNU and ING have developed internal environmental management programs which cover property, purchasing, transport and waste management issues.

Management of Internal Sustainability Issues

In document Lecciones de Economía Española de García Delgado y Myro.pdf (página 170-173)