“In the US, funds with ethical overtones represent 10-20 per cent of the total stock exchange market”, says Sara Bronner, commissioned by the Swedish EPA to take a closer look at the Nordic environmental funds. “It is most likely that the development of ethical funds in the Swedish market will follow the development of, for example, the US and England, and that the share of ethical funds in the Swedish stock market will grow even quicker than today,” she says.
There are still many banks, insurance companies and investment companies that do not offer their customers environmentally profiled investment options. This, together with increasing environmental awareness, gives scope for a growing number of environmental funds.
The Swedish EPA report presents all the Nordic environmental funds, their profitability and investment profile as of July last year. A selection of international environmental funds is also included. The idea is to update the report annually.
The funds have been divided into three categories:
- Sustainable funds: ethical funds that carry out environmental analyses of companies. Sustainable funds are founded on the assumption that those companies that work actively to reduce their environmental impact will be more successful than their more passive competitors in the future.
- Environmental technology funds: sector funds that invest only in environmental technology. These funds are not based on ethics but reflect a belief in environmental technology as a future growth industry.
- Non-profit funds: that award contributions to environmental organisations. There is not necessarily a need for special selection criteria besides traditional financial analysis, although companies producing weapons, tobacco and alcohol are often excluded. Instead, the fund gives some of its net assets or management fees to a particular cause in line with the fund’s profile.
Few investment funds fall strictly into one category or another, but the classification makes it easier to understand the investment strategy applied by the environmental fund managers, explains Sara Bronner.
There are currently 144 ‘ethical funds’ in the US, 44 in the UK, 14 in Canada, around 30 in the Nordic countries, and around 70 in the rest of Europe – a total of around 300. Most of the funds have special environmental selection criteria. Strictly environmental funds are a relatively new occurrence. There are approximately 40 such funds in Europe and 25 in North America.
For more information, contact: Sara Bronner, Lommen AB, +46-8-587 112 75, bronner@lommen.se