Ethical investing something of a minefield
Media article
By James Kirby
Published April 9 2006
http://www.theage.com.au/
I’ve never had much time for ethical investing.
If that sounds vaguely, um . . . unethical, then give me a second.
The Federal Government has signed a new deal allowing the export of uranium to China. The bulk of this
uranium may come initially from BHP Billiton, Australia’s biggest mining company.
Now, believe it or not, among the funds investing in BHP are ethical funds from AMP and BT, two of the
biggest players in the money management game.
Yep, you can make money from digging up the raw material for nuclear bombs and sending it to China and
still feel good about yourself with a leading ethical fund.
In fact the biggest single investment at both of these ethical funds is BHP. AMP’s Sustainable Future Fund
has BHP clocking in at 10 per cent of the entire fund. The BT Ethical Fund goes one better with 12 per cent
in the world’s biggest miner.
I had nearly given up on the prospect of finding an ethical fund that differed in any significant way from a
rampaging Cayman Island-based hedge fund, when it was brought to my attention that not all ethical funds
think the same.
I gather some of the more idealistic funds are appalled that AMP and BT are diluting the whole notion of
ethical investing. James Thier, the executive director of the $400 million listed Australian Ethical Fund says,
“If sending uranium to China is not an ethical issue, I don’t now what is.”
Thier is a self-confessed purist. Australian Ethical is what’s known as “dark green” in the ethical funds
business. He says Australian Ethical will not invest in uranium because it is worried about security issues
with yellowcake and the group is not convinced nuclear power is a viable alternative.
Australian Ethical also says the big boys in ethical investing are ignoring important changes that are
happening across the market. As Thier explains, Woolworths is now a key player in the gambling industry
through its pokies holdings in the pub chains, yet large ethical funds such as AMP have it on the books.
Whether you think Thier is right or wrong about uranium, or gambling, hardly matters. But surely in ethical
investing, at least, investment funds should play a straight bat.
One last thing: Steven Lew, son of retailing tycoon Solomon Lew, must have been puzzled as he stood in the
dock of the Federal Court last Wednesday being publicly berated for dealing with China. Lew’s sin? His
Playcorp company had outsourced clothing work on Commonwealth Games souvenir merchandise to China.
Dealing with China had breached the code of regulations set by M2006, the organiser of the Commonwealth
Games.
(China is not a signatory to certain agreements of the International Labour Organisation on labour standards.)
So there you are. You can send uranium to China (and get financing from an ethical fund), but if you get
some tailoring done there, you might end up in court for breaching labor regulations. No wonder there’s a
boom in ethical consulting and no wonder so many people are sceptical about the ethical investing business.
James Kirby is editor of Eureka Report at http://www.eurekareport.com.au/