Investors
December 01 2000
by Briefing teamShareholders pre-eminent in company law
The final consultation paper in the government's Company Law Review, issued November 30, retains proposals that relevant social and environmental information be integrated into a new annual operating and financial review, and adds that accountants will be required to take a view on the process for ensuring this has been done, as part of their audit. There is no change in its earlier decision that the primary responsibility of directors is to shareholders. The consultation suggests limiting extensions of directors' contracts to a maximum of 12 months and terminating excessive executive payoffs. Contact DTI on 020 7215 0220 (http://www.dti.gov.uk)
Governance still an issue
Over a third of FTSE 500 companies still double up the positions of chairman and chief executive and fewer than one in five says they conform fully to the Combined Code, according to research released by the Pensions Investment Research Centre (PIRC) on November 22. Nearly seven out of every ten directors are on a one year contract or less.
However, the report comes after calls in mid-October by the National Association of Pension Funds and the Association of British Insurers - between them controlling almost half the stock market - that leading FTSE companies should divide the roles of chief executive and chairman. Contact Stuart Bell, PIRC, on 020 7247 2323 (http://www.pirc.co.uk)
Ethical funds success
Ethical investment funds continue to grow and perform well, according to a survey released by the CIS (Co-operative Insurance Society) at the start of November. This year's survey covers fifty funds managing £2.3 billion, compared with 35 funds managing £1.9 billion a year ago. The sector has outperformed the FTSE all share index over a five-year period.
CIS has committed itself to applying socially responsible investment across its £26 billion investment portfolio. Its survey so far of companies with holdings has found:
• 47 percent claim to have made a decision on social responsibility against their own commercial interests;
• over half are looking to control energy use;
• two-thirds say their social responsibility is driven by long-standing corporate philosophy.
Contact Russ Brady, CIS, on 0161 837 5672 (http://www.cis.co.uk).
Top funds back SRI
Almost half the top pension funds want their fund managers to take account of the impact of corporate social responsibility on the performance of their investments, according to a survey of 171 funds by the Social Investment Forum published October 5. Currently only a quarter of those responding positively actually do. Respondents together represent assets of £302 billion. Local authority pension fund managers emerge as more socially responsible in their investment practice than their occupational equivalents. Contact Penny Shepherd, UKSIF, on 020 7749 4880 (http://www.uksif.org)
news in brief
• The National Provident Institution launched a new socially responsible fund on October 2 which guarantees annual bonuses to its investors. NPI also pledged to donate £100 to charity for every new investment into the bond before the end of 2000. Contact Sacha Hardy, NPI, on 01892 704 528 (http://www.np.co.uk)
• Research by the Universities of Glasgow and Dundee into 40 ethical funds in seven European countries show they equal or surpass the performance of 40 comparable funds with no specific ethical criteria between 1996-98. Contact Niklas Kreander, University of Glasgow, on 0141 330 5666 (http://www.glasgow.ac.uk)