Article date: 6 May 2008
The team that manages Norwich Union's Sustainable Future funds believes the investment case for biofuels is overstated. Biofuels are promoted as an answer to climate change and energy security and governments around the world are promoting their use:
- EU has ambitious targets to increase the use of biofuels in transport.
- Political support in the US for biofuels is increasing
- Gordon Brown's 2007 Budget announced a package of measure to support the use of biofuels.
- There is evidence that some biofuels could be making matters worse by adding to the man-made emissions of carbon dioxide that they are supposed to curb.
- There are environmental concerns about the way the feed stocks for some biofuels are grown as forests in Brazil and Malaysia are being cleared to grow them.
- Biofuels companies are exposed to volatile commodity prices and tend to be heavily dependent on political support.
Peter Michaelis, manager of the Norwich Union UK Ethical fund, said:
"Biofuels were once hailed as an answer to both climate change and energy security but it has become clear that they are not without their problems. For the time being, we are focusing our investment activity on other areas providing solutions to climate change, such as wind, solar, fuel cells, and technology for energy efficiency.
"The majority of biofuels are screened out of the Norwich Union Sustainable Future funds, with the exception of those that have a significant positive energy balance or that use waste as their raw material."
Press office contacts:
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Notes to editors
Biofuels are made from renewable biological resources, or the waste they produce. Sources include wood, oil crops such as sunflowers, rapeseed and linseed, sugar cane, sugar beet, wheat, miscanthus, animal slurry, sewage and chicken litter.
There are two main types:
Biodiesel: Made from plant oils or animals fats, biodiesel can be blended with petroleum diesel.
Bioethanol: Made from fermenting plants such as sugar cane, corn or sugar beet, bioethanol can be used as a petrol substitute in some engines. Ethanol can also be blended with conventional fuel between 5% and 85% blends. Engines do not generally need modifications when the fuel is used as a 5% blend.
About Norwich Union's socially responsible investment funds
Norwich Union has seven socially responsible investment funds. The investment management team is based at Morley Fund Management and is one of the largest and most experienced in the UK. The team is lead by Dr Peter Michaelis.
About Norwich Union
- Norwich Union is the UK's largest insurer. It is a leading provider of life, pensions and investment products and one of the largest Financial Adviser (FA) providers. FAs provide over 70% of the company's long-term savings business in the UK.
- Norwich Union is the UK's largest general insurer with a market share of around 14%, with a focus on insurance for individuals and small businesses. Norwich Union's news releases and a selection of images are available from Aviva's internet press centre at www.aviva.com/media
About Morley Fund Management
- Morley Fund Management Limited is the UK-based asset management business of Aviva plc. Firms within the Morley group of companies manage £156bn from offices around the world as at 28 February 2006.
- Morley manages both institutional and retail funds under the Morley brand. It also acts as investment manager for a range of retail investment funds, marketed in the UK under the Norwich Union brand, and international funds marketed under the Aviva Funds brand.
- Further information about Morley Fund Management can be found at www.morleyfm.com