Summary: Working Group on Private Sector

Ethical investments

What is the impact of ethical investment criteria on the behaviour of companies? What is the impact of ethical or unethical behaviours on financial markets? How to assess a company's ethical performance? What is the role of NGOs, trade unions, pension funds, governments in this process? 

Dr. Alfredo Sfeir-Younis, Special Representative to the UN and WTO, World Bank, opened the session by calling economic actors to go on towards “conscious business”.

Mr. Patrick Odier of the Swiss Private Bank Lombard Odier Darier Hentsch, explained how he deals with “Sustainable Growth Assessment”: His team of sustainability analysts has developed a risk approach of social and environmental issues affecting companies, where judgment is made on progress rather than on state, then allowing the banks’ clients to select precise ethical criteria to be integrated in the investment strategy. This risk approach is also used by managers and analysts operating outside the niche of ethical investments. Talking about pension funds, Mr. Odier insisted on the ultimate objective of such professional investors which is to bring the highest financial return.

Mr. Piet Sprengers of  Global Reporting Initiative, started by defining Socially Responsible Investing (SRI) as either selecting investments or shareholder engagement. SRI represent 1.5 of total assets under management in the Netherlands, a case representative of the European situation. In his view, the impact of SRI on companies is still limited but is growing steadily. Mr. Sprengers sees an important future for both selecting investments and shareholders engagement, the two joining in the concept of transparency. Talking about the man on the street, he said that everybody is an investor, be it through its credit card or through its pension fund. NGOs, trade union and other civil society organizations should participate in this growing process by supplying information and by investing responsibly.

For Mr. Edouard Dommen of Actionnariat pour une Economie Durable (ACTARES), it is silly to think that there are totally clean companies and totally dirty companies. From there, he prefers to dialogue with criticized companies in order to get to know them better, rather than excluding whole industries. He prefers the inclusive method (or best-in-class) compared to the exclusive method historically used in the USA (exit alcohol, pornography, tobacco, etc.). Mr. Dommen insisted on the cultural and ethical diversity of today's’ world, and said it is important that global accountability or reporting initiatives seriously integrate such diversity. He works on the development of a shareholders community network.

In the discussion, a latino-american delegate criticized the fact that Europeans and Americans talk a lot about ethical investments while some of their most prominent companies are cheating on accounting regulations. In his view, ethical investments seem a contradiction in the terms. Other participants showed interest for potential social progress and transparency coming along ethical investments. Asked about the financial performance of such investment, Mr. Odier said that until now, ethical investments have underperformed conventional investments, notably because the dominant model of ethical investments (exclusion of whole industries), with less diversification, brings greater exposure to financial risks.

Presenters' Documents Available

17.26_dommen_eduardo_abstract.doc (40 K)
17.26_mach_antoine.doc (26 K)

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