Socially responsible investment team publishes sustainability ratings for FTSE 100 and Eurotop 50 companies

Article date: 6 December 2005

Morley Fund Management’s socially responsible investment(SRI) team, manager of Norwich Union’s Sustainable Futurefund range, has published its latest Sustainability Matrix.

The Matrix rates companies according to social and environmentalrisks, liabilities and opportunities identified by Morley’sSRI analysts. A company’s product is rated from A to E, andmanagement practices from 1 to 5.

This is the third time the team has published the matrix. Associally responsible issues have become more important to companiesin Europe, this year the Morley SRI team has included the Eurotop50 in its ratings for the first time. This allows for cross-bordercomparison.

This year the Matrix has highlighted that:

  • Most companies disclose information on how they manage socialand environmental issues and are now better at understanding howthese issues can affect their business
  • Generally, European companies are strong on environmentalmanagement and reporting, but UK companies have higher standardsof corporate governance
  • Supermarkets – There is a big difference between thebest and worst performers in a sector where the environmentalimpacts of sourcing and transportation of products from overseas(ie: food miles*) is a key issue. Carrefour (C2), Sainsbury (C2)and Marks & Spencer (C1) do well
  • Banks – There has been an improvement in levels ofdisclosure and reporting from banks. HSBC is the most improvedcompany in the FTSE (up from a C4 two years ago to a C1). RBS (C2)also scores well
  • Pharmaceuticals – the highest ratings go to companiesdeveloping innovative and life-saving treatments. GlaxoSmithKlineis a leader, rated A2
  • Oil and gas – Security of supply and the environmentalimpacts of CO2 emissions are key risks for this sector. BG Group(C2) is a leader with more than 70% of its product mix in naturalgas and strong environmental management. Statoil (C2) has lowergeopolitical risk as its production is predominantly in Norway.Shell and BP rate D2
  • Chemicals – Rising energy costs favour companies withefficient processes to reduce costs and mitigate environmentalimpacts. Air Liquide (B2) is the leader in this regard. JohnsonMatthey is rated B3 for the long-term potential of its products(automotive catalysts and fuel cells) to cut emissions of CO2 andharmful particulates.

Clare Brook, director of socially responsible investment atMorley, said: "We are proud to have published our Matrix ratingsfor the third time. Few fund managers engage publicly with thelargest companies in Europe in this way. The rationale behindpublishing the Matrix is to provide a clear and transparentanalysis of companies’ social, environmental and governancepolicies for our clients."

Peter Michaelis, head of SRI at Morley Fund Management and managerof Norwich Union’s Sustainable Future UK Growth Fund, said:“We believe that companies operating in a socially andenvironmentally responsible manner will be most likely to succeedover time and we have a duty to encourage improved standards ofcorporate responsibility. By publishing the ratings, we stimulatedebate and encourage improved social, environmental and governancepractice, which is exactly what our customers are expecting of usas major shareholders.”


Norwich Union Press office contact:
David Gwyer 01904452828 mobile 07800 699508

Morley Press Office contact:
Beth Saint 020 78098125

Notes to editors:

*About food miles
Food miles measure thedistance a product travels to market. The further away a product isproduced, the more food miles it generates. Food miles are an issuefor socially responsible investors because much of the produce istransported by air, which is one of the fastest growing producersof carbon dioxide emissions.

About the Sustainability Matrix
Morley FundManagement’s socially responsible investment team produces anannual Sustainability Matrix. The Matrix ranks companies accordingto social and environmental risks, liabilities and provides ameasure of business sustainability.

The Matrix adds another dimension to its fund management styleand:

  • Encourages companies to improve their social and environmentalperformance
  • Protects and increases shareholder value by adding anotheranalytical tool
  • Provides clear analyses of companies’ social andenvironmental policies
  • Raises awareness of corporate social responsibility

The SRI analysts use a Sustainability Matrix to rate stocks onthe basis of two key elements:

  • Product sustainability (rated from A to E) - assessesthe extent to which a company's core business (the products orservices it offers) is helpful or harmful to society or theenvironment.
  • Management quality (rated from 1 to 5) – assesseswhether a company has appropriate structures, policies andpractices in place for managing their social, environmental andgovernance risks.

Companies that fall within those shaded boxes (green) in thematrix below are deemed appropriate for inclusion in NorwichUnion’s Sustainable Future funds. For segregatedinstitutional clients, Morley Fund Management offers the option tobroaden their investment universe by lowering the screeningrequirements or removing them altogether. Specific details on fundexclusion criteria are outlined on the website

Norwich Union’s Sustainable Future funds matrix

Norwich Union’s Sustainable Future fund range is managedby the socially responsible team of Morley Fund Management. Theteam is led by Peter Michaelis and is one of the largest and mostexperienced in the UK.

About Norwich Union
Norwich Union isone of the UK's biggest insurers. It is a leading provider of lifeand pensions products and one of the largest Financial Adviser (FA)providers. FAs provide over 70% of the company's long-term savingsbusiness in the UK.

Norwich Union has strategic alliances with building societies andother leading UK brand names including CIS and The Royal Bank ofScotland Group. Norwich Union’s news releases and a selectionof images are available from Aviva's internet press centre

Morley Fund Management
Morley Fund Management Limitedis the UK-based asset management business of Aviva plc. Firmswithin the Morley group of companies manage £147.8bn from officesaround the world as at 30 September 2005.

Morley manages both institutional and retail funds under the Morleybrand. It also acts as investment manager for a range of retailinvestment 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

Morley Fund Management is a business name of Morley Fund ManagementLimited, registered in England No. 1151805. Registered Office: No.1 Poultry, London EC2R 8EJ. Authorised and regulated in the UK bythe Financial Services Authority and a member of the InvestmentManagement Association.

Morley Fund Management is also a business name of Morley FundManagement International Limited. Both are Aviva companies.

Contact us at Morley Fund Management, No. 1 Poultry, London EC2R8EJ.

Compliance: MFM/05/1530

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