Advisers’ clients need to be "active stewards" of the companies they invest in, Matt Crossman, engagement manager at Rathbone Greenbank Investments, has said.
When asked how investors can hold companies’ corporate social responsibility (CSR) policies and performance to account, he told FTAdviser they need to use their shareholder rights "to the fullest extent possible".
"While that includes things like voting, it would also include ringing up the investor relations team and really holding, I guess what they put out in public and checking if that’s really being walked through in practice," he explained.
Speaking ahead of Good Money Week, which runs from 29 September to 5 October, Mr Crossman confirmed ethical and sustainable investing had moved on from applying a negative screening process to stocks.
I think we are in an era where trust in business is at quite a low ebb.Matt Crossman"We have seen a huge development in this area over the last few years," he explained.
"I think anyone could screen out – if you don't want to invest in tobacco, you just don't invest in a tobacco company.
"But if you are concerned about human rights abuses in the supply chain, how do you screen that out? Well, you can't.
"So I think there has been a development of specialist houses offering that level of in-depth screening."
Mr Crossman also said advisers’ clients are more concerned now about how the companies they invest in conduct themselves with regards to environmental, social and governance issues.
"I think we are in an era where trust in business is at quite a low ebb," he suggested.
"And, certainly, the new generation of investors we are seeing want to know more about how the companies they are invested in, what they are doing towards things like the Sustainable Development Goals.
"These are things that are coming up more and more in client meetings."
John David, head of investments at Rathbone Greenbank Investments, also observed: "For many years, the perception that there is a price to pay for taking social, environmental or ethical factors into account has dissuaded many from investing in this way, and also limited the number of advisers and DFMs promoting the area.
"But this change in perception, added to a growing awareness that there is a need for a more socially and environmentally sustainable economic system... has helped drive growth."
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eleanor.duncan@ft.com
