The City regulator, the Financial Conduct Authority, seems determined to stamp out rampant ‘greenwashing’ in the investment fund industry. That is, stopping investment companies from using misleading literature to dress up investment funds as eco-friendly or green when they patently aren’t.
Last month, it set out its proposals to clean up the multi-billion pound sector with better fund labelling.
Then, a few days ago, it detailed how it would go about overseeing the ratings agencies that provide the ESG (Environmental, Social and Governance) data on individual companies which fund groups rely upon to construct green investment portfolios.
Hidden agenda: ‘Greenwashing’ is where investment companies use misleading literature to dress up investment funds as eco-friendly or green when they patently aren’t
The regulator’s move is a welcome one because the data that these agencies supply is at best unreliable and random in nature.
It’s a point investment expert Alan Miller made eloquently earlier this month in an article I wrote about ESG.
He analysed the ten largest ‘sin’ stocks in the FTSE100 Index operating in oil and gas, alcohol, tobacco, mining, defence and gambling.
He discovered that these stocks – Shell, Diageo, BP, Rio Tinto, BAT, Glencore, Anglo American, BAE Systems, Imperial Brands and Flutter Entertainment – had a better average ESG score than the FTSE100 as a whole according to one leading ESG data provider (Refinitiv).
He was flabbergasted. He said: ‘How crazy is it that a tobacco company such as BAT is rated the third highest ESG rated company in the FTSE100 Index.’ Indeed.
Although the FCA would like to regulate these ratings agencies, that won’t happen in a hurry (it would require Treasury intervention).
So, the FCA wants the agencies to adhere to a code of conduct that would make the ESG ratings fit for purpose.
Fine in theory. But in practice, it ain’t going to happen – despite all the good intentions of Sacha Sadan, the FCA’s passionate director of environment, social and governance.
This is because the code will be developed by a group co-chaired by investment group M&G, top City lawyer Slaughter & May, Moody’s and the London Stock Exchange Group.
The former two are OK although why M&G is singled out for special treatment above all other investment houses is a bit of mystery. M&G and ESG aren’t natural bed partners.
The latter two are respectively a ratings agency and an owner of one (Refinitiv).
So, rating agencies will be defining how they should behave in the future. Really?
Miller’s reaction? ‘Simply astonishing,’ he says. ‘A recipe for conflicts of interest to abound.’
The opposite, I suppose, of turkeys voting for Christmas.
Tortuous journey for economy
A big thank you to those readers who participated in The Mail+ post-Budget poll that appeared in Wealth & Personal Finance seven days ago.
For readers who did not take part, we asked two questions: was the Government right to boost the state pension by inflation – and similarly, was it right to freeze income tax thresholds?
On the first question, more than nine out of ten readers believed an inflation-busting increase to the state pension was the correct move. On tax thresholds, reader opinion was understandably more divided – with a small majority in favour of the deep-freeze policy adopted by Chancellor Jeremy Hunt.
Let’s hope the Government’s policies will put the UK economy back on track, sooner rather than later. It’s going to be a tortuous journey – a bit like commuting by train.
Jingle Bells socks saved the day…
Making people smile isn’t part of my job description. But I was reminded of its therapeutic effect last week when I hooked up with the Santander media relations team for egg on toast and black coffee at The Wolseley in London (not a celeb in sight, although it was early in the morning).
The team is headed by Miranda Seymour, a dead ringer for Barbra Streisand in her prime. Barbra, sorry, Miranda reminded me of an interview I did with Peter Wood, founder of Direct Line, 30 years ago that she was present at. At the time, Direct Line was making waves in the motor insurance market with its bold advertising featuring a four-wheeled red phone.
Sock it to ’em: Get some singing socks for Christmas and make someone smile
Apparently, Peter was in a foul mood ahead of the interview and had taken it out verbally on one of the staff present. The omens weren’t good. But I bowled in wearing a pair of Christmas socks which gave out a Jingle Bells chorus if pressed in a certain place. Yes, it was Christmas, I was young, and desperately trying to make a name for myself in the cut-throat world of personal finance journalism.
Peter spotted the outrageous socks as soon as I entered the room – and I duly let him listen to them:
‘Oh, jingle bells, jingle bells
Jingle all the way
Oh, what fun it is to ride
In a one horse open sleigh.’
Peter couldn’t stop laughing. The atmosphere changed in an instant and Miranda breathed a big sigh of relief. The interview went swimmingly well.
Moral of this story: get some singing socks for Christmas and make someone smile.
You’ll find a mighty fine selection at: redbubble.com/shop/musical+santa+socks.
Marathon man is one in a million
By the time 2022 has come to an end, Gary McKee will have run 365 marathons – a marathon a day. A remarkable achievement: the equivalent of running from the UK to Australia.
Like the Herdwick sheep that roam the Lakeland fells to the east of where he lives in Cleator Moor, he’s a hardy soul. So, 331 marathons down, 34 to go.
In his early 50s, Gary has managed to get so far because he is hard core; has got a great group of friends who have taken turns to run with him; and has a supporting employer who allows him to run in the morning (he tends to get running by six o’clock) and then work later in the day.
So far, this phenomenal running machine has raised more than £251,000 for Macmillan Cancer Support and Hospice at Home West Cumbria.
Helping people less fortunate than himself is his main driver (he’s raised a lot of dosh for Macmillan before).
You can help his herculean effort by donating at: justgiving.com/fundraising/threesixfive. Don’t forget to add Gift Aid.
His mission, he says, is to raise £1million.
Knowing the grit of this individual, I wouldn’t be surprised if he gets there.
RMT doesn’t give a damn
Tough talk: RMT boss Mick Lynch
So more strikes have been announced by the RMT, a union that doesn’t give a damn about the customers who indirectly pay its members their wages through exorbitant train fares.
Last week, GWR staff added to customer misery by deciding to have a little strike of their own, throwing my work commute into chaos.
I managed to get into work using an alternative SWR service – although it wasn’t without its own issues. A lack of cleaners meant the guard on the first service out of Wokingham on Tuesday morning had to apologise for the unkempt state of the train.
And to think that so far the only compensation I have received for all the inconvenience caused by bolshie unions over the past few months is a cheque (yes, a cheque) from SWR for a miserly £3.03.
To RMT boss Mick Lynch, above: stop playing politics with our railways and instruct your members to get back to work.