EUROPE - New boutique Four Winds Capital says they are not looking at SRI as superficial box-ticking but direct involvement in investment regions.
"We are not looking at SRI as superficial box-ticking," according to Kimberley Tara, managing director of the commodities and natural resources manager, which has just opened a London office.
"That is why we are not seeking an SRI label. We are looking for good business and ethical business is good business," she said.
Tara explained that using local workers in forest management is a logical step as they have the knowledge of the area. This creates a job market in the region and helps the economy. "We are not trying to save the world, but we do not do things that are unethical," Tara stressed.
Four Winds, which has approximately $200m in total assets, has just launched its first enhanced timberland fund forEuropean institutional investors. It not only invests in trees but also in related areas like acquisition of property, managing timberland, conservation, the negotiation of sales of trees and products like biomass.
So far its backers include the London Pensions Fund Authority (LPFA), the Swedish pension fund, Kapan and F&C's sustainable investment department.
The fund is invested globally but Tara stressed that regions with political and economical instability are excluded from the portfolio. This would introduce too much volatility, which could undermine the 8-12% target return for the bond underlying the fund. "The fund is a diversifier for pension funds as it is an investment somewhere between property and natural resources but it also has the bond-like stability of return", Tara said.
Four Winds' latest fund is based on the manager's principle of capital preservation. "Investing in commodities you have to try to keep your money rather than take more risk to try and make more money," Tara explained. She pointed out that while between May and September last year commodities indices lost up to 25% while Four Winds' commodities fund only lost 1%.
Chris Armitage, former pensions controller at Sainsbury's and now head of Four Winds' London office, was sold on Four Winds' concept when he was looking for commodity investment possibilities for the supermarket's pension fund. "I found that the way to go into commodities is actively not by buying an index," he told IPE.
Tara added that most pension funds buying commodities indices are not aware that they are taking a high risk. "You have to be flexible in commodities and not be passive," she stressed.
One of the next projects for Four Winds will be looking into is a sustainable resources fund.