Many ethical and socially responsible funds are investing in stocks which do little to tackle climate change, according to a new report.
The IFA firm Holden & Partners' study reveals very few of the top 10 holdings in SRI, ethical and environmental funds are invested in companies tackling climate change.
While names like Vodafone and RBS featured prominently in the report, many funds have holdings in large mining corporations and oil conglomerates.
Investors clearly have a growing appetite for ethical funds, with the latest IMA statistics revealing record inflows of £473m into the sector last year.
However, Holden & Partners says many investors could be unwillingly buying into companies which are "part of the problem rather than part of the solution”.
“Of the SRI funds that gave full information about their holdings, Henderson’s Industries of the Future scored most highly with 51.1% of its fund in environmental solutions providers,” the report says.
“In contrast, environmental stocks make up less than 1% of L&G Ethical fund’s portfolio.”
Holden & Partners has a more favourable view on the new generation of environmental and climate change funds, even though they hold positions in companies such Porsche and Renault.
Peter Holden, partner at Holden & Partners, says the report shows SRI and ethical funds have not kept pace with the public’s appetite for environmental solutions.
“Many are investing in mainstream ‘old economy’ companies whose contribution to solving environmental problems is questionable,” he says.
“There are good environmental funds available though, the environmental economy is enjoying strong growth and is an investment opportunity.
“However, it is a complex area and we would recommend that anyone making an investment seek independent financial advice.”
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