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IPE special report May 2018

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Morley publishes SRI records of FTSE100 companies

UK- Morley Fund Management has published a controversial ranking of the largest 100 UK companies’ social and environmental credentials.

A so-called ‘sustainability matrix’ measures the business sustainability of FTSE 100 companies in terms of social and environmental issues. Against this is each company’s management vision and practices on sustainable development and corporate responsibility.

Morley, the CGNU Group’s £107bn asset manager, says the ratings should encourage companies to improve their social and environmental record.

Business sustainability is rated from A to E (fundamentally incompatible with sustainable development) while management vision is ranked between 1 (clear vision of sustainable development) to 5 (incompatible).

None of the FTSE100 members scored a 1 or a 5 but pharmaceutical companies Astrazeneca and Glaxosmithkline achieved the best overall grade of a2. Tobacco companies Gallaher Group and Imperial Tobacco appeared at the bottom of the table with a rating of e4.

Some companies like Diageo and BP scored well on management vision and practice but poorly on sustainability. The converse was true for companies like Reuters and software group Sage.

Morley uses the ratings as a basis for making investment decisions. For its £150m Sustainable Futures Fund, the forty five FTSE 100 companies ranked below c3 are ineligible.

Clare Brook, director of Morley’s SRI team, says: “many companies now recognise the long term financial risks they face by ignoring environmental and social impacts, but believe the city to be entirely uninterested in sustainable development.

“Publishing the matrix demonstrates for the first time that the city has a vested interest in working with companies to develop an economic model where sustained returns are rooted in sustainable development.”

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