APPRAISAL OF THE SELECTION CRITERIA USED IN GREEN INVESTMENT FUNDS

Colin Ryall and Simon Riley

Business Strategy and the Environment, 1996, vol. 5, issue 4, 231-241

Abstract: Investment funds which use environmental criteria in deriving their portfolios are now available. The criteria used to evaluate corporate environmental policy and performance adopted by two of these fund management organizations are examined. The methodology of the Ethical Investment Research Information Service is also discussed, with particular emphasis on the environmental factors used to screen UK equity portfolios. This provides an invaluable guide to the broader subject of ethical investments. There are a number of problems that investors have encountered in evaluating companies on environmental grounds, in particular the reticence of many UK companies to adopt a more progressive approach to environmental issues, which is manifested in the lack of publicly available information on corporate environmental policy and performance. Nevertheless there are a number of initiatives being undertaken to raise awareness of environmental issues among UK companies and investors at large. The Body Shop controversy that arose in 1995 is an interesting example of how the debate has moved on, and examples are given of other companies which have been included in green portfolios. In addition to regulatory pressures, financial institutions, individual investors and other interest groups have a key part to play in influencing corporate environmental policy through their investment decisions.

Date: 1996
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https://doi.org/10.1002/(SICI)1099-0836(199612)5:43.0.CO;2-B

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