Disclaimer – this is all just my zeroes and ones man
FP WHEB Sustainability Class C – Accumulation (GBP)
This fund comes recommended by amongst other Ethical Consumer and DiYinvestor. It aims to invest longterm in sustainable industries, looking towards a fossil free future. So far so good but the devil is in the details. IF it has sustainable in the title, what does that actually mean?
Well after a long time browsing their website it seems there is a vague methodology. As criteria, there are five environmental and four social themes. What are they? They also have an impact calculator from 2017. But where are the investment criteria?
Sustainable?
Well the fund aims to be transparent and indeed information is easily found. The engagement case studies are interesting since WHEB are keen to stress that they apply pressure on companies they invest in. Fair play that they include the not successful alongside the successful engagements on their website, so let’s check a few:
- A failure: WHEB consider it important for auditors to change every 10 years. Varian have been with Price Waterhouse Coopers for over 50 years. They will “continue to engage” on this issue…
- A failure: WHEB strongly supports gender diversity but Smurfit only have 2 out of 12 female board directors. WHEB wrote a letter, Smurfit didn’t reply. WHEB will write again
- A success: “Over the years that Orpea has been in the WHEB investment strategy, the share of independent Directors has risen from 25% to 64%.”
- A partial success: Engaging with CSL about the ethics of blood tests
Any alarm bells ringing yet? I mean I’m glad they take an interest in these things which i am not saying are not important but these issues are quite far from being directly about sustainability, no?
Top10
Since I don’t know any of the top10 holdings, I thought I would look them up (and they are listed by WHEB on a factsheet):
- Ansys – develops engineering software
- WABCO Holdings – Component manufacture and supply for commercial vehicles
- Xylem – a US water company, spun off from ITT at the same time (2011) that it also spun off its military businesses
- Linde – manufacture of industrial gases
- Roper Technologies – a diversified technology company [??]
- Ecolab – global provider of water, hygiene and energy technologies
- Danaher Corp. – globally diversified conglomerate
- A.O. Smith Corp. – manufacture of heaters and boilers
- Thermo Fisher Scientific – biotechnology product development company
- Agilent Technologies – Healthcare equipment and services spun off from HP in 1999
These companies mention very ltitle about sustainability on a cursory check. I can understand investing long term in alternatives to fossil fuels but this top10 doesn’t seem to reflect that at all. The eco in ‘Ecolab’ comes from its previous name Economic Laboratories by the way. Let’s go deeper…
A.O.Smith
A.O.Smith had a 2018 Corporate Responsibility & Sustainability Report. When i browsed it, it gives the company’s core values:
- A. O. Smith will achieve profitable growth
- A. O. Smith will emphasize innovation
- A. O. Smith will preserve its good name
- A. O. Smith will be a good place to work
- A. O. Smith will be a good citizen
Notice anything missing?
In 2107 A.O. Smith had record sales of $3 billion.Despite being called the Corporate Responsibility & Sustainability Report, there is very little about sustainability. What there is seems to revolve around saving money to make more money.
The Key Investor Information Document states: At least 80% of the Fund will be invested in shares and in companies anywhere in the world in sectors which have been identified as providing solutions to the challenges of sustainability.
I’m not really seeing the links here at all.
Xylem
So let’s go deeper. Do Xylem mention sustainability on their 2018 Annual Report? Actually yes:
At Xylem, sustainability is at the very center of who we are and what we do. As a leading global water technology company, we address one of the world’s most urgent sustainability challenges on a daily basis – responsible stewardship of our shared water resources. Technology is playing an increasingly important role in helping the world solve water issues. We have a long history of innovation, but today, we are focusing more than ever on the powerful capabilities of smart technology, integrated management and big data. These solutions will allow us to transport, treat, test anduse water smarter and more sustainably than in the past, and enable our customers to realize greater water and energy efficiencies. Our link to global water and environmental challenges informs how we think about sustainability and drives us to become a more sustainable company.
That is something at least.
Ecolab
Ecolab does have a focus on sustainability!! “At Ecolab, sustainability is an integral part of everything we do.” Yay maybe they can live up to the name.
WABCO
One mention of sustainability in the 2017 Annual Report: As our industry strives toward environmental sustainability through cleaner, greener vehicles, WABCO is innovating technologies for the rapidly expanding electric vehicles market.
Linde
It emerges from Linde’s Annual Report 2017 that their sustainability contribution is carbon capture and utilisation (CCU). They have built the world’s largest world’s largest carbon dioxide purification and liquefaction plant in Saudi Arabia, next to two ethylene oxide plants. Saudi Arabia being an oppressive regime is a problem for me here.
Not actually that sustainable
Sustainability does not crop up in a search of annual reports for Ansys, Danaher. Agilent had zero hits although sustainable does turn up: We work very hard to make sustainable products,using less packaging and power and meeting the most stringent international standards. Roper has one basically meaningless mention, as does Thermo Fisher.
To return to the WHEB fund itself, it seems it doesn’t have the usual ethical criteria, more a preference to invest in ESG, which stands for environmental, social and governance issues. To me this sounds rather vague and intangible. I don’t doubt these companies are doing something sustainable but it shouldn’t be so hard to find out what.
In the prospectus for FP WHEB Asset Management Funds the word sustainable is not to be found. That’s unbelievable considering they have a sustainable fund!? ‘Ethical’ gives no hits, ‘criteria’ gives 13 but none are relevant.
VERDICT
I’m sorry this is shit. I would classify it as well-meaning liberal rubbish.
Always do the research and go for something really positive screened like Triodos instead if you want to accomplish real change.
Finance with Ethics 