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INSURANCE FIRMS NAMED AND SHAMED. RECORD FEEBLE ON ETHICAL INVESTMENT

19 Jan 2000

UK insurance companies are failing to take environmental and social issues seriously. “Capital Punishment - The Insurance Industry and the Global Environment”, a report [Acrobat PDF† approx. 184KB] published today by Friends of the Earth (FOE), concludes that the great majority of investment funds are fuelling environmentally and socially damaging behaviour by multi-national companies. This is in spite of the growth in demand for 'ethical' investment funds with 'green' investment policies.

“Capital Punishment” looks at the social and environmental record of 14 large companies including Exxon, ICI, Monsanto and Rio Tinto. Mining, oil, chemical and forest product companies continue to clear irreplaceable forests and habitats, pollute waterways, emit greenhouse gases and tolerate working alongside oppressive regimes. The report provides details of the holdings that UK insurance companies had in these companies (as of Summer 1999) [1].

The report provides a league table of insurance companies and their environmental policies[2]. In response to a survey conducted for the report (and a series of meetings between FOE and top UK insurance companies) not one company was able to demonstrate that it did all of the following - the average positive response was one out of five questions asked.Companies were asked if they

• operate a sustainable development policy
• report on policy implementation
• screen main stream investments on environmental and social grounds
• sign up to the UNEP statement of Environmental Commitment by the Insurance Industry [3]
• offer a 'green' or 'ethical' fund to their customers.

FOE believes that the insurance industry, with its enormous financial weight [4], should push companies to improve their environmental record, as well as pressing Government to introduce mandatory corporate environmental reporting and tough regulatory regimes to reduce greenhouse gas emissions, encourage clean production and protect biodiversity.

Commenting, FOE Policy and Campaigns Director Tony Juniper said:

“The vast majority of investment decisions are made with only one thing in mind - a search for fast returns. Of course, any investment fund has to protect the interests of its investors, and look to make their capital grow. But as global events such as extreme weather conditions linked to climate change now cost the insurance industry billions of dollars every year, as well as killing many thousands of people across the planet, the search for a quick buck - as opposed to long-term sustainable rewards - no longer makes social or even financial sense.

Today we reveal the failure of Britain's insurance companies to make ethical, social or environmental decisions when investing. We hope that more and more these companies' millions of customers will demand better investment policies and insist that their money is not used to fund destructive transnational companies. The likes of Exxon, Monsanto, and ICI must be told that their shares will be sold if they do not comply with tough environmental standards.”

NOTES

[1]    Norwich Union, for example, holds shares in some of the most environmentally irresponsible oil companies such as Chevron, Elf Aquitaine, Exxon, Mobil and Occidental; in mining companies such as Rio Tinto and in chemical companies such as Glaxo Wellcome, Great Lakes Chemical and ICI. Yet in its 1998 Annual Report, the Norwich Union Group states: “We...take environmental issues into account when making commercial decisions”.

[2]    see table of insurance companies attached. The table is based on replies to a questionnaire sent out by Friends of the Earth in the summer of 1999 to each of the companies below. The questionnaire asked for details of their ethical policies relating to their investments as indicated below.

[3]    Since FOE has carried out this research, the Prudential Portfolio Management announced in December 1999 that they will be implementing mainstream screening of their UK equity investments. Friends of the Earth hope to see this kind of comprehensive approach to mainstream investments adopted by the insurance sector as a whole.

[4]    The insurance industry accounts for annual revenues of over $2 trillion worldwide and the UK is one of the most insured countries in the world. UK pension funds alone are worth over £760 billion and institutional investors hold the majority of shares in companies such as Shell, Rio Tinto, Monsanto and Exxon.

NOTES TO TABLE

(1) Zurich Financial Services has signed the UNEP statement. Zurich recently merged with BAT and owns Allied Dunbar.
(2) Eagle Star, also owned by Zurich Financial Services, does have an ethical fund. Allied Dunbar, however, does not.
(3) Friends Provident will be bringing out its first Environmental and Social report in 2000.
(4) Although Legal and General gave positive responses to most of the questions, no documentation was provided.
(5) The answers were provided over the phone as Prudential refused to complete a questionnaire. Scottish Amicable part of the Prudential Group manage an ethical fund.
(6) Prudential Portfolio Managers (part of the Prudential Group) announced in December 1999 that it will start to implement ethical screening of its UK equity funds and identify social and environmental policies which may affect company performance.
(7) No documentation was provided

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