UBS Warburg predicts fast SRI growth in Europe
Mike Foster - 30 Aug 2001

A number of interesting points on SRI

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Researchers at investment bank
http://www.efinancialnews.com/archive/quicksearch.cfm?search=UBS_Warburg
UBS Warburg have predicted rapid growth for socially responsible investment
(SRI) funds under management in Europe.

In a recently published report,
http://www.efinancialnews.com/archive/quicksearch.cfm?search=Larry_Chen

Larry Chen of
<http://www.efinancialnews.com/archive/quicksearch.cfm?search=UBS> UBS said that SRI has entered the mainstream: "Changing public sentiment and
perception, coupled with new laws and regulations will provide the fuel to
ignite a wave of product innovation and services."

It predicts particularly rapid growth of ethical products in Europe, hard on
the heels of a growth in US SRI funds from $682bn (EUR750bn) in 1995 to
$2.16 trillion in 1999, equivalent to 13% of the market place. Even the most
advanced SRI market in Europe, the UK, only has a 1% SRI market share, or
£3.3bn (EUR5.3bn).

The retail market for such products in the UK, pioneered by
<http://www.efinancialnews.com/archive/quicksearch.cfm?search=Friends_Provid
ent> Friends Provident, is expected to grow to £10bn within two years
according to
<http://www.efinancialnews.com/archive/quicksearch.cfm?search=Barchester_Gre
en_Investment> Barchester Green Investment, sector specialists. Growth in
German products is expected to be exponential.

Institutional interest in SRI issues is also growing, although this tends to
take the form of corporate engagement rather than the award of substantial
ethical mandates. A report by the
<http://www.efinancialnews.com/archive/quicksearch.cfm?search=Association_of
_Chartered_Certified_Accountants> Association of Chartered Certified
Accountants suggests that the UK now leads Europe in terms of its socially
responsible stance following initiatives from such bodies as the
<http://www.efinancialnews.com/archive/quicksearch.cfm?search=National_Assoc
iation_of_Pension_Funds> National Association of Pension Funds, the Carbon
Disclosure Project, and the
<http://www.efinancialnews.com/archive/quicksearch.cfm?search=ACCA> ACCA
itself.

UBS Warburg warned, however, that suggestions that ethical funds produce
outperformance should be treated with care. Although it can be argued that
SRI-aware corporate managements can be good managements, the exclusion of a large number of stocks on ethical grounds can seriously restrict investment universes.

It said: "Having researched numerous studies and conducted our own analysis
we find no evidence that socially responsible investment confers any
sustainable performance advantage in the long term."

But UBS Warburg has also failed to find evidence that SRI investment damages
performance, thus providing an argument for the ethically inclined to feel
that by pushing funds into SRI products they will not be making financial
sacrifices.