February 28, 2007
New Ethical Fund Brings Value-Based Investing to High Street
by Anne Moore Odell
Marks & Spencer Money, a former division of the top English retailer Marks & Spencer, has started
offering a new SRI fund called the M & S Ethical Fund, which will be managed by two well-respected
Looking to meet the demands of English investors interested in socially responsible investing, Marks & Spencer Money launched its new Ethical Fund at the beginning of February. This
marks a huge leap into the mainstream for the SRI investing movement.
"M & S has
seen a increase in demand for socially responsible products, whether green or ethical," said James
Thorpe, PR Manager for Marks & Spencer Money. "A green/ethical fund was missing from M & S Money's
portfolio of unit trusts, so it was a natural step to launch one."
Marks & Spencer Money
started originally in 1985 as a credit card service for the shopping giant Mark & Spencer, a
retailer of clothing, food, and household goods. However, it now offers many banking and investment
services and products from its branches, many of which are housed in Marks & Spencer stores, making
for one-stop shopping for both retail goods and financial services.
"With the launch of
the M & S Ethical Fund, we are seeing a SRI product available from the shops of a high street
retailer across the UK, associated with a highly trusted brand and advertised in the center-right
press as well as the center-left press," Penny Shepherd, Chief Executive of the UK Social
Investment Forum (UKSIF) told Socialfunds.com.
Shepherd added, "Advertising in center-right papers
such as The Sunday Telegraph now is a smart move. The Telegraph papers’ regular coverage of green
issues reflects the way concern about climate change and quality of life is now a mainstream issue
in the UK and their older and richer readership profile has long made them attractive for general
personal finance advertising."
In 2004, Marks & Spencer Money was sold toHSBC, one of the world’s largest banking and
financial services organizations. HSBC is the first bank to become carbon neutral and invests in
carbon neutral projects on Marks & Spencer Money’s behalf.
HSBC Investments was charged
with overseeing the new Ethical Fund portfolio. HSBC Investment chose two asset managers to invest
the portfolio’s funds:Sinopia Asset Management, which is part of the HSBC group andJupiter Asset Management. Sinopia works with a balanced
account while Jupiter uses an active fund management to chose its stocks from a pre-approved list
"The combination of the fund managers means that risk is spread more
diversely with the aim of improved investment performance," Thorpe stated.
managers employ ethical research strategies to make sure that all the portfolio’s stocks meet M &
S’s investment criteria. These criteria include avoiding companies that have a poor environmental
record, conduct nonessential animal testing, and use child labor. Managers will also avoid
companies whose primary activities involve armaments, the fur trade, gambling, pornography or
Sinopia is HSBC's quantitative fund management business. They will work in
conjunction with the research consultant Innovest, who specializes in analyzing and rating
companies on social responsibility issues. Companies that pass M & S’s ethical scoring levels are
passed to Sinopia, who in turn, will use their quantitative processes to establish which companies
offer the best value. Innovest sets three criteria for choosing stocks. These three grades are Best
in Class, the UN Global Compact, and negative screening.
Jupiter has 18 years of
experience in the socially responsible investment sector and is one of the UK's market leading fund
managers. Jupiter invests in two types of companies. The first type of company offers solutions to
environmental and social problems, which Jupiter judges using positive criteria in six
environmental areas: clean energy, green transport, environmental services, sustainable living,
waste management, and water management. The second type of company actively manages its social and
"M&S Money comes into this movement following the interests of the
consumers as they look to purchase ethical products," said Emma Howard Boyd, Director of Jupiter.
Howard Boyd has worked in the SRI field for twelve years and seen the strong performances of
environmental funds. "The old arguments against SRI funds not being profitable don’t hold up," she
The M & S Ethical Fund can be sheltered in a tax-exempt ISA wrapper which allows
English investors to put up to €7,000 into a tax-free account. The Ethical Fund will charge an
annual management fee of 1.5%, which is standard for managed funds. For people who buy into the
Fund by May 5, 2007 the initial charge will be waved. After that date the initial charge will
become 1%. Because the initial minimum investment of €100 and €25 for regular payments is
relatively low, the Ethical Fund lets everyone interested in investing in SRI take part. The Fund
will also be available from independent financial advisors (IFAs).
Marks & Spencer Money
also works to walk its own talk. All of Marks & Spencer Money's electricity is from renewable
sources—73% from bio-mass and organic waste (which has a lower rate of CO2 than fossil fuels) and
27% from zero emission sources (hydro, solar and wind power). Besides using all recycled paper for
its marketing materials, 63% of its waste is recycled, including paper, IT equipment, toners,
garden waste, aluminum cans and cardboard. The company also organizes car sharing and a staff bus.