According to a Financial Times (FT) news report, the Morley Fund Management list of companies committed to social and environmental issues is designed to pressure the FTSE 100 firms to improve their performance.
Topping Morley’s list were two pharmaceutical companies, AstraZeneca and GlaxoSmithKline, while cigarette makers Imperial Tobacco and Gallaher Group brought up the rear, according to the FT.
The table ranks companies from A to E for business sustainability on environmental and social issues, and from one to five for management vision and practices on sustainable development and corporate responsibility.
Managers Use Rankings for Investment Decisions
The rankings are used by Morley’s fund managers when judging whether to include a company in a pension fund’s portfolio. Morley is the £105 billion investment arm of CGNU, the UK’s largest life insurer.
For most of Morley’s funds, the sustainability matrix is an additional tool for fund managers. Just because a company is ranked at the bottom does not mean it cannot be included in a portfolio – although it is a factor, the FT report said.
But, for Morley’s Sustainable Futures funds, with around £150 million under management, only the 55 organizations ranked down to C3 can be held in their portfolios.
Until now, fund managers have refused to publish their private rankings of companies for fear of upsetting those firms and possibly losing access to top executives.
However Morley CEO Keith Jones said his company shouldn’t have that problem because Morley discusses a company’s rank with its executives before the table is published.