Friday, 23 January 2009

Colonial First State's "Un-ethical" investment

Colonial First State, one of Australia's largest investment managers is a signatory to the United Nations Principles for Responsible Investment (PRI). Sounds high minded, doesn't it? But it's not.

Despite signing on to be active owners and incorporate environmental, social and corporate governance (ESG) issues into their ownership policies and practices, (Principle 2), it relieves itself from extending the 'social' part of this commitment from practising ethical investment.

This could be out of date but here's a quote from a January 2008 Colonial First State document under the heading "Without making 'ethical' judgements":
"Adopting PRI does not mean that we are adopting Socially Responsible Investing (SRI). SRI generally involves the exclusion of companies based on an ethical assessment of their business operations, such as those engaged in the alcohol, tobacco and gambling industries. While we see a place in the market for funds based on an ethical investment premise, this is not the approach which our responsible investment policy will generally take. We do not aim to reduce the investment universe for our funds through ethical screening, but rather seek to play a more constructive role with all companies through the ongoing development and measurement of ESG practices."

Colonial is in the news today (click here for the story in The Australian) practising exactly what they wrote about not being bound to 'ethical' judgements. They are assisting in the raising of equity for Wesfarmers, a company which conducts pokie gambling in over 70 venues in Queensland, New South Wales and South Australia. Click here to see a list of their pokie pubs. Wesfarmer's pokie pubs engage in the practise of luring children into their pokie pubs. You can see for yourself by having a look at what I found during my recent observations in Brisbane.

So when you're thinking about investment with Colonial, "Responsible" may not mean "Ethical". For this blogger, it is an example of cutting fine distinctions on language and socially irresponsible.

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