Ethical finance

The evolution of ethical finance

In the report Green, social and ethical funds in Europe 2012 Review90, Vigeo presents the evolution of ethical funds in Europe between June 2011 and June 2012. Over the last year, there has been confirmation of a slowdown in this financial market segment, which felt the effects of the difficult economic situation, and a tendency towards stagnation already seen as from 2011, with a few exceptions.

The number of SRI funds (Socially Responsible Investment) domiciled in Europe and intended for the common market, remained more or less unchanged - 884 funds active in June 2012 compared with 886 in 2011 - disclosing a new trend when compared with the very prominent growth which characterised the three-year period 2008-2010. Despite this, genuine recession was not seen but rather a period of consolidation: the value of the assets managed,in fact, continued to rise, + 12% in relation to the around Euro 95 billion in 2012 and Euro 84 billion last year, growth which had the same proportion disclosed between 2011 and 2010 (see charts No. 30, 31 and 32).

Observing the trends of the 11 European countries examined by the survey in greater detail, we can note that France, the United Kingdom, Switzerland, Belgium and Germany represent the most solid dimension of the SRI funds market. However, if cumulatively 82% of the European SRI funds are domiciled in these 5 countries and they manage 83% of the value of the assets, in France alone 29% of the funds are domiciled and its manages 44% of the total funds.

During the year, only SRI funds domiciled in the Netherlands (+ 19%) and France (+ 15%) increased; their number remained unchanged in Denmark and Austria while in the other countries they underwent slight decreases, with the exception of Belgium which, despite maintaining a considerable percentage - 25% of the funds were domiciled - reported the greatest drop (-7%). The absolute value of the assets under management increased in five countries out of the eleven: France (+31%), the Netherlands (+24%), Germany (+18%), the United Kingdom (+11%) and Sweden (+5%) while a decrease was seen in Spain (-36%), Italy (-16%), Switzerland (-15%) Belgium (-8%) and Austria (-1%).

Chart No. 30 – Overall number of SRI funds in Europe (2008-2012) 

Chart No. 30 – OVERALL NUMBER OF SRI FUNDS IN EUROPE (2008-2012)

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Source: Vigeo, Green, social and ethical funds in Europe. 2012 Review

Chart No. 31 - Total assets under management for SRI funds in Europe and Italy (2008-2012)

Chart No. 31 - TOTAL ASSETS UNDER MANAGEMENT FOR SRI FUNDS IN EUROPE AND ITALY (2008-2012)

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Source: Acea processing on Vigeo data, Green, social and ethical funds in Europe. 2012 Review 

90 The report, now in its twelfth edition, represents a point of reference regarding the analysis of the trends in socially responsible retail funds (SRI) domiciled in Europe. The scope of this analysis includes: Austria, Belgium, Denmark, France, Germany, Italy, Luxembourg, Norway, the Netherlands, the United Kingdom, Spain, Sweden and Switzerland and takes into consideration the SRI retail funds which use ethical, social and environmental selection criteria active as of 30 June 2012.

Chart No. 32 - Assets under management for SRI funds by country (2012)

Chart No. 32 - ASSETS UNDER MANAGEMENT FOR SRI FUNDS BY COUNTRY (2012)

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Source: Vigeo, Green, social and ethical funds in Europe. 2012 Review 

The ethical analysts assess Acea

The relationship between Acea and ethical finance circles continues to be enhanced and gain depth: in 2012 the company verified its position in the assessments of analysts, ratings and ethical finance indexes, as illustrated below.

Acea stock is included in the ECPI Italy SME’s Equity index which selects the 30 low/average capitalisation companies listed on the Italian market which achieve a positive assessment of the sustainability performances. The ECPI method contemplates over 100 positive analysis criteria on production processes, environmental impacts, governance dealings with the community and handling of diversity (gender, age, culture).

Furthermore, within the sphere of the ethical share indexes developed under partnership between ECPI and FTSE, Acea is present in the FTSE ECPI Italia SRI – Benchmark list. The latter includes the 100 medium/high capitalisation listed companies, included in the FTSE All-Share, which have good ESG (Environmental, Social, Governance) characteristics relating to environmental impacts, production processes, relations with the communities, human capital, corporate governance and markets.

Acea has been included in the Living Planet Green Tech Europe Index, as from its establishment in December 2010. On the basis of financial and environmental criteria, the index - established by a partnership between CA Cheuvreux (Crédit Agricole), Living Planet Fund (a socially-responsible investment company which originates from the WWF International) and Amundi - selects European companies, listed and active in the green economy sector (for example: alternative energies, handling of water resources and waste, energy efficiency).

According to Kempen SNS, which has been examining Acea since 2005, the company confirms its commitment to corporate citizenship and therefore is also included in 2012 in the Kempen SNS Socially Responsible Investing universe.

In conclusion, also Oekom Research, which after having assessed the environmental and social aspects of the business operations, expressed a rating on Acea, confirming the level of C+ (scale of D-/A+).

The appraisal process carried out by an ethical analyst 

In April 2012, Acea was contacted by Vigeo, European leader among sustainability rating agencies, for the periodic review process on the ESG (Environmental, Social and Governance) aspects which qualify the business operations.

Vigeo produces and supplies its research to more than 100 investors, present throughout the world, which include sustainability criteria in its portfolio decisions.

The review process, which is carried out following the steps established by the rating agency, has made it possible to establish useful and structured dialogue with the company. In the first stage, Acea forwarded Vigeo pertinent information (policies and performance data) with regard to six areas: human sources, environment, dealings with customers and suppliers and business ethics, human rights, corporate governance, participation in local development. For each sphere, the analyst - who, besides assessing the information provided by the company, availed itself also of external, autonomous and independent sources - concentrated the examination on the pertinence of the corporate strategies and the objectives, on the consequent implementing processes and the results achieved.

In the second and third stages, on the basis of the information collated and processed up to this point, Vigeo and Acea had an intense discussion, aimed at more in-depth analysis, via specific questions posed by the analyst and answered by the company. The last two stages first of all led to the drawing up of a draft CSR profile for Acea, verified by the company with regard to the absence of errors in the figures and completeness of the information, and then to the closure of the process with the production of a complete and updated profile on the company which Vigeo made available to its customers (investors).