Fund managers are beginning to act like responsible business owners

Are the world’s big shareholders finally grasping that, as the technical owners of listed companies, they have long-term financial and social responsibilities? There are a few signs.

You can see it starting in the pay protests across the sector. And you can see it in the regular divestment from fossil-fuel firms (more for fear they will be hit hard financially by climate change related legislation than anything else, I suspect). But there’s something more interesting afoot outside the longstanding rows about pay and oil.

A coalition of 71 investors – overseeing more than $2trn in assets – has put out a warning abut antibiotic use by ten giant food companies (including Dennys, Greene King, Whitbread and the Cheesecake Factory). The idea is to try and persuade them to work to prevent the routine use of antibiotics by meat and chicken suppliers – so as to cut the risk of full antibiotic resistance in humans.

This is excellent news. That’s partly because the risk is high, and anything done to deal with it is good, but also because the fund management companies in question – they include Aviva, Boston Common and Coller Capital – are finally showing that they are thinking long term.

They recognise that antibiotic failure, could have huge effects on global health but also that government attempts to prevent it if the private sector doesn’t get there first, could have huge effects on company profits and hence “truly frightening” effects on their client’s long term wealth.

There is, said Lauren Compere, of Boston Common in the FT, “a financial risk linking to companies not anticipating (regulatory changes). As long-term investors, we have a to think about the risk the companies face.”

In a perfect world, fund managers would always have been thinking like this. They haven’t been. Perhaps this is a small starter of a sign they are beginning to get it.

  • John Anderson

    I have to say this has been probably the most helpful posts for me. Please keep it up. I cant wait to read whats next.

  • Jab

    WWF responds to the analysis published today finding that a UK killer whale died with extreme levels of toxic pollutants.

    One of the highest concentrations of toxic pollutants ever recorded in a marine mammal has been revealed in a Scottish killer whale that died in 2016.

    The adult whale, known as Lulu, was a member of the UK’s last resident pod and a post-mortem also showed she had never produced a calf. The pollutants, called PCBs, are known to cause infertility and these latest findings add to strong evidence that the pod is doomed to extinction.

    The level of PCBs found in Lulu’s blubber were extreme at 950mg/kg, more than 100 times the 9mg/kg limit above which damage to the health of marine mammals is known to occur. A 2016 analysis showed the average concentration for killer whales in the north-east Atlantic was about 150mg/kg.

    Simon Walmsley, WWF’s Oceans Manager, comments:

    “The shockingly high levels of PCB contamination found in Lulu, the UK killer whale are another tragic example of the impact that we are having on nature. Such high levels of pollution in our oceans, rivers and atmosphere cannot be ignored. This requires action and it requires it fast. We must learn the lessons from these legacy pollutants and not release such contaminants into the environment without a clear understanding of the lasting impacts. In this case PCBs will stay in the environment and continue to pollute for many decades. We are on track to lose two-thirds of wildlife by 2020 and a large driver of this is the way we treat the planet. The results of this analysis must act as a reminder that it is imperative that we continue to strive to find a way that 7bn people can live on our planet without trashing it.”