SRI: Learning from the U.K. experience

(June 29, 2005) Canadians looking to advance socially responsible investing at the retail level are taking a closer look at work being done in other countries, particularly Britain, considered to be at the forefront of the movement.

“They are more bullish on SRI than their North American counterparts,” says Emma Hunt, who has been working on SRI issues in the U.K. for the past six years and attended the recent Social Investment Organization conference in Toronto.

There are a number of reasons for that attitude, Hunt explains, including an “encouraging” legislative and regulatory environment as well as media, which tend to pay closer attention to social and environmental issues.

More CSIC 2005 Coverage:

•Advisors form SRI marketing group •Canadians not connecting corporate social responsibility to social investing •Popularity eludes SRI funds •SRI: Learning from the U.K. experience •Talking to Clients: Socially responsible investing

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Still, despite a 20-year history of SRI funds in Britain, it took a lot of work to draw attention to them, Hunt points out. Six years ago, SRI wasn’t on the radar for most U.K. financial advisors. “But we knew we could reach clients if they knew about it,” she says. “So a huge amount of effort was put into raising awareness [among advisors], providing tools like an ethical fact finder, so it’s not up to the client to raise the issue, it’s built into the financial planners’ sales material in the form of a series of simple questions.

“Then there’s also training because even if a client expresses interest in SRI, planners were uncomfortable talking about issues like pornography, violence, animal testing, it’s just really awkward.”

Recently, the U.K. Social Investment Forum (UKSIF) launched an online toolkit, aimed at financial advisors interested in offering SRI. The 23-page technical guide provides a brief introduction and history of SRI, but is mostly focused on talking to clients about the issue.

Ask an ethical fact finding question during the initial client interview, the guide suggests, such as “Would you like any social, ethical or environmental issues to be taken into account when looking at your investments?”

“It’s collaborative,” says Hunt. “People have joined forces to deliver something because they know when people work together there’s a halo effect. People have to work together and generate goodwill, and it doesn’t necessarily have to be financial, it could just be some advisors and fund companies getting together and doing some training sessions.”

Hunt says she strongly believes that there is a significant untapped market for social investing in Canada and that our SRI community can learn from what happened in Britain. “The U.K. market went through some very painful lessons, where everybody said it was up to someone else to take care of it, because it’s got to come out of somebody’s budget.

“It will take people working together and it’s not just about financial resources,” she says. “If there is goodwill and pro-activity, it could be done within three years, quite easily.”

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To download “Investing Responsibly: A Technical Guide For Financial Advisors,” please visit the UKSIF web site, www.uksif.org.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com

(06/29/05)

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