Trustees say no to investing oil wealth in ethical funds
Shetland Charitable Trust has turned its back on investing the isles’ oil funds more ethically in the hope of gaining greater returns.
Trustees agreed not to revise their current approach, which sees some of its funds tied up in tobacco firms and arms manufacturers, as well as companies accused of violating human rights, after hearing the performance of ethical funds had historically been relatively poor.
Their refusal to change tack came despite a call from Rick Nickerson to examine a more measured approach by experimenting with ethical funds. He wanted a report to be compiled on how a “small amount” of funds could be tested on an ethical portfolio over five years.
“It’s a sad reflection on society in general that the best performing portfolios are in tobacco and armaments. It’s a sad reflection on where we are,” he said.
He argued the trust had not shied away from experimenting with different kinds of investments in the past, and should be brave enough to do so again. However he failed to get a seconder from among his fellow trustees.
His comments followed a detailed presentation from Graeme Johnston from the trust’s investment consultant, Hymans Robertson.
Mr Robertson said the trust could lose up to £100,000 per annum if it specifically avoided investing in tobacco companies.
“Excluding companies can have an impact on your overall performance, and that is something you have to bear in mind,” he told trustees on Thursday.
He added past events were “not necessarily a guide” to how ethical investments may perform in the future, however trustees jumped on his early remarks in a bid to secure the trust’s interests.
Betty Fullerton, who recently stood down from her role as chairwoman of Shetland Health Board, said refusing to invest in products such as tobacco “might not be in the interests of the trust”.
She said she personally thought it was right to ban tobacco in public places, but added: “It would be wrong to pursue personal interests for the trust. We should not be prepared to accept high risks for the trust.”
Her comments tie in with a report from the trust’s legal advisers Turcan Connell, which says trustees are entitled to follow an ethical investment but must put aside any personal preferences and take proper advice.
Gary Robinson said the charitable trust had been “100 per cent funded by oil and gas companies” some of which have “less than ethical standards”.
He said trustees had no right to adopt a “holier than thou” attitude when it came to investing in tobacco and other products. “We could go round this table and probably rule out investing in anything on ethical grounds,” he said.
Allison Duncan said he did not believe in ethical investment at all, adding the question of how the isles’ oil monies are invested should be left entirely to fund managers.
“We have investment managers who are professionals. They know the framework and we have to leave them alone to get on with their work and give us maximum returns,” he said.
Laura Baisley said she was “elected on her policies,” adding trustees did not have the right to “dictate to our managers what we should do with these funds”. “If we start going down the road of keeping everybody alive we’ll invest in nothing.”
The question of how Shetland’s oil funds are invested has been a sticking point for a number of trustees over the last five years, with Gussie Angus and Jonathan Wills having both taken a strong stance in support of ethical funds in the past, although neither was present at Thursday’s meeting.
Speaking after the meeting, Mr Angus – who could not attend the meeting for personal reasons – said tobacco was an “undesirable endeavour to be investing in”, and questioned why the trust was involved in it when it claimed lives.
“I repeatedly beseeched my fellow trustees to stop the trust investing in tobacco shares on the basis that smoking-related diseases kills one Shetlander every week,” he said. “If the charitable trust is supposed to be investing in the community – logic would have it that it would want a live community. They seem to be investing in the dead.
“It’s regrettable and shameful and shows a lack of regard for what I believe is a thoroughly undesirable field of human endeavour to be investing in.”