Naughty or nice? Companies making it onto our fund managers’ nice lists

With Christmas nearly upon us, parents around the country* are using blackmail to encourage good behaviour: no child wants to end up on the naughty list and miss out on presents, after all.

But some Elite Rated fund managers are constantly looking for companies that exhibit good behaviour: companies that act responsibly towards staff, shareholders and the environment. Where there may be one or two aspects that could still be improved upon, these managers will also actively engage with company management to encourage positive change.

We asked three fund managers to give us some examples:


Sue Round, manager of EdenTree Amity UK

“Engagement is a critical part of our due diligence process across our range of Amity funds. It supports our aim of improving disclosure and raising standards.

“We invested in Hotel Chocolat, the manufacturer of premium chocolate products at IPO. Although the company passed our negative and positive screens, we were delighted when the Senior Independent Non-Executive Director reached out to us to understand how they should be reporting on environmental and social issues.

“We were able to provide insight and guidance of what we expect companies to disclose including social supply standards, particularly around the sourcing of cocoa. Over time we have seen the quality of non-financial disclosure improve considerably, perhaps as one consequence of entering into constructive dialogue at an early stage.”


Bryn Jones, manager of Rathbone Ethical Bond

“Rathbone Ethical Bond fund applies a strict set of positive and negative criteria. Prior to investment, all potential holdings are screened against these criteria by Rathbone Greenbank Investments (the ethical investment unit of Rathbone Investment Management Limited) and the fund will not invest in bonds issued by companies which breach any of the negative exclusions. It also requires potential investments to match at least one of the positive criteria.

“There have been a number of instances over the years where we have engaged with companies, leading to positive outcomes. One example is BUPA, which enjoys good overall standards, but had a small number of isolated issues in aspects of the business and Greensleeves Care. Through engagement, we were instrumental in encouraging the company to report on its positive social impact.”


Peter Meany, manager of First State Global Listed Infrastructure

“No infrastructure project (or investment) comes without risk. So we monitor trends in things like oil spills and train derailments.

“We also pay close attention to the carbon intensity of the companies we could invest in, to see what impact they have on the environment today. If we can encourage a utility company to use more renewable energy and reduce its carbon footprint, I think we are having more of an impact than buying a ‘clean’ company to start with.

“One example of where we have engaged with a company is in the energy space: Williams Co. We were uncomfortable with the company’s commodity exposure and amount of leverage. Changes to its board (four new members) and its management (CFO and COO) have all resulted in positive changes.”


*a technique currently being used by the parents in this office, at least

The views of the author and any people interviewed are their own and do not constitute financial advice. However the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Before you make any investment decision make sure you’re comfortable and fully understand the risks. If you invest in fund or trust make sure you know what specific risks they’re exposed to. Past performance is not a reliable guide to future returns. Remember all investments can fall in value as well as rise, so you could make a loss.