Thursday, 20 December 2007

Ethical Investments Transcript

On Wednesday 12th Dec, I put a question to the council meeting in Maidstone on ethical investment, As I have explained, Kent County Council holds millions of shares in BAE (Britain's biggest arms manufacturer), tobacco and oil companies. These are held as the pension fund on behalf of all local authorities in Kent and therefore Maidstone Borough Council have a stake in this. The responses from the leaders of the four groups on MBC are set out below:

Stuart Jeffery:

Does this council agree that investing in arms, tobacco and oil companies should be deplored? Will the Borough Council call upon Kent County Council to adopt an ethical investment policy and to withdraw its significant shares in arms, tobacco and oil companies.

Fran Wilson:

My personal view is that I would not like to see investments directly to arms but I would require far more information regarding investments into oil companies or other companies such as BAE who have a wide range of products before I would be persuaded to deplore them as investments.

I think that your questions is very simplistic and that any such policy would require far more sophistication before it would be capable of implementation.

What I can say is that this authority does not invest in shares and tharefore it is not an issue for this authority. I can also tell you that the major investments made by KCC are on behalf of the superannuation fund and that theis authority as employers needs to make substantial contributions to this fund if investment returns fall short. We are currently contributing nearly £1.5m per annum to make up for historic shortfalls and would be very concerned if KCC had an investment policy that required this authority to make additional contributions. It would be difficult to justify that to our council tax payers.

Eric Hotson:

The council does not make investments as implied in the question but of course it does pay into the benefit of its staff into the KCC pension fund. There are at the moment 70000 contributing and non-contributing members. At the last audit I believe the pension fund had a deficit of £50m. Last year this authority budgeted for a staggering £1.4m to support them. Next year our budget provides for an even larger sum. The KCC superannuation fund committee is advised by financial experts on their investments, these investments are scrutinised and in recent years those investments have proven to have realised the best market rewards and it is the duty of the superannuation board, its advisors and inspectors, to ensure that the highest possible yield is obtained.

If the current investment portfolio changes to a lesser and unproven investment stream, a higher risk of an even greater contribution by MBC will be required hence threatening the services that we presently supply, including of course, green spaces.

Pat Marshall:

I have very little to add to whats already been said...

Morel D'Souza:

I have got a problem with some words that you have used in your question, for example, "to be deplored" and that KCC have got significant shares - I don't know where you got that information about significant shares - we don't have that infomation available, however I just wanted to talk about ethical investments and how people feeel about it.

Ethical investment is investment which explicitly seeks to take environmental, social and ethical issues into account. Or as one of teh financial advisors described to me, ethical investment means choosing investment that reflects your values.

Many people would be surprised to hear that they have some kind of investment in the stock market. This does not just mean those who own shares. Most pensions and endowment mortgages and savings chemes are based on funds of money that are invested in shares. Most of these funds aim only to make finacial goals and as Cllr Hotson said, the highest yield - they don't care about anything else. They tend to invest your money without concern for moral or ethical values.

There are three broad approaches to ethical investments. the best funds tend to combine all three. The negative ones, which are the arms trade, investment in tobacco companies - you omitted nuclear power as a fund and anti-trade unions where investments are against trade unions.

we would support not investing in the arms trade, converting swords into plough shares - we would support that scheme because hopefully job losses in the arms factories would be gained elsewhere. However there is a lot of corruption in the arms industry particularly from BAE and they tend to maintain repressive regimes thus depriving nations of resources of health and education, especially in the poorer countries.

Of course tobacco is another industry where it conflicts with medical research so we would not support it but our government has banned smoking in many public places, advertising etc.

Now the interesting point is why you did not include nuclear power. You mentioned oil, we are an exporting countyr of oil and I would not agree with you that investment in oil companies is bad. neither would I agree that nuclear is bad as it is a much more effient form of investment.

On the positive side the ethicla investment fund managers will actively seek to invest in companies whose products and services are of lang term benefit to teh communities in which they operate and contribute to a better environment and this might include openness about activities, pollution control, eneregy conservation and providing equal opportunity policies.

And thirdly, the best way is to get people together and talk about investments and make sure that the companies that you are investing in have social responsibility and take climate change into account.

So it makes financial sense as well as moral sense to invest in companies that are planning ahead to create a better environment. We strongly support socially responsible investment. In 2000 it became law for occupational schemes to say whether they took account of any social, environmental or ethical factors when deciding what stocks to invest in.

Investors now have to complete a statement of investment principles. Now if you think that KCC is breaking the law, not to have sought experts advice as Cllr Hotson has suggested on its investment, I suggest that you report local authorities to the police for further investigation.

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