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The Social Responsibility Performance of Ethical and Solidarity Funds: An

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Article  in  Business Ethics A European Review · August 2004

DOI: 10.1111/j.1467-8608.2004.00363.x

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 Volume 13
The social responsibility
performance of ethical and
solidarity funds: an approach to
the case of Spain
Mar|¤ a Jesu¤s Mun
oz-Torres,Mar|¤ a AŁngeles Ferna¤ndez-
Izquierdo and Mar|¤ a Rosario Balaguer-Franchn
Introduction
In the past few years, concepts like ‘social
responsibility investment’, ‘social and environ-
mental investment’, ‘ethical investment’, ‘socially
responsible funds’, ‘ethical funds’ and others have
become increasingly important. All of them refer
to similar but not equivalent concepts and
demonstrate the existence of a new financial
situation whose policy for action is based on
economic, social and environmental criteria.
The origin of what is today socially responsible
investment (SRI) comes from the political envir-
onment experienced in the US and in Europe in
the 1960s, when social and environmental move-
ments, above all in support of peace, served to
deepen the awareness of society of social respon-
sibility and sustainable development issues. As a
consequence of this, at the end of the 1970s the
concept of social investment attracted a large
number of American investors, who began to
question the idea of financing the Vietnam War
through investments. So, in 1971, there emerged
the first true US ethical fund. In Europe, the first
ethical fund was launched in Sweden in 1965 and
n
Respectively, University Lecturer, University Professor and Assis-
tant Lecturer, Department of Finance and Accounting, Universitat
Jaume I, Castellón, Spain.
200
Numbers 2/3 April/July 2004
in the UK the first ethical fund was launched
in 1984. According to SiRi Group (2003), the
leading countries in SRI in Europe are the UK,
Sweden, France and Belgium.
These events have involved noticeable changes
in the size and composition of stock markets
and even in the habits and financial culture of
individual investors. However, these habits are
not homogeneous in all international asset mar-
kets, and if we carry out an analysis of the ethical
criteria by countries, some differences can be seen.
In Spain, funds that can be identified as ethical
investment funds have been marketed since 1997.
The development of such investment funds has
been less than in other developed countries, not
only in number of funds or assets under manage-
ment but also in the fund policy aspects and the
establishment of social criteria. Another aspect
that shows the weakness of SRI in Spain is the
lack of engagement with companies made by these
funds.
As we show in this research, when we analyse
Spanish SRI more deeply, we find that Spain is
at an earlier stage of development than other
European countries. The Spanish regulatory legis-
lation focuses only on corporate governance issues
(Olivencia and Aldama Reports); the selection
methodology focuses mainly on the application
of negative criteria (negative screening), and the
r Blackwell Publishing Ltd. 2004. 9600 Garsington Road, Oxford OX4 2DQ, UK
and 350 Main St, Malden, MA 02148, USA.
 Business Ethics: A European Review
number of funds that can be considered ethical,
and the assets under management, dropped in
2003.
Although some systematic work has been
carried out in order to clarify the evolution and
social responsibility characteristics of such funds,
no attempt has been made to quantify their
financial and social results. Therefore, the aims
of our research are as follows: firstly, to point out
the corporate social responsibility (CSR) aspects
of ethical investment funds and to review the
literature on these aspects; secondly, to depict the
development of ethical investment funds in Spain,
and finally, to make a proposal for social
performance that would serve as an approxima-
tion for classifying and evaluating the CSR of SRI
funds in Spain.
CSR aspects of SRI funds
Elements differentiating SRI funds
The first academic work on SRI funds in Spain
(Camino 1993) focuses on the origins, the under-
lying economic theories, and a critical analysis of
ethical investment. He defines ethical funds as
funds in whose investment policy particular social
values (environment, health, justice, etc.) take
precedence over strictly financial ones, by decision
of its members. This definition prioritises social
values over financial ones and has been super-
seded in the literature.
Nowadays, ethical and socially responsible
investments are, above all, an investment philo-
sophy combining ethical and financial objectives.
The United Kingdom Social Investment Forum
(UKSIF) defines socially responsible investment
as ‘investments enabling investors to combine
financial objectives with their social values, linked
to the areas of social justice, economic develop-
ment, peace and the environment’. This definition
is in accordance with the sustainability triple
bottom line philosophy (Elkington 1999).
These socially responsible investments base the
choice of their portfolio structure both on
information that has been made public and on
monitoring by independent experts of the com-
panies under analysis. This investment policy
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includes a list of negative and positive criteria.
The definition of these criteria must be accom-
panied by specific indicators making them opera-
tional, allowing companies to be included or
excluded.
The most outstanding elements differentiating
the operation of traditional investment funds
from ethical investment funds are:
1. Ethical and socially responsible investment
policy: This is the document that defines the
ethical, social and environmental criteria form-
ing part of each fund’s ethical and socially
responsible investment policy. Normally, a list
of criteria is established with specific defini-
tions in order to guide the type of business
research that must be carried out.
2. Pre-selection of the universe of investing shares:
From the definition of these criteria, the
mechanisms for research into companies form-
ing part of the share markets are established.
In accordance with this research, companies
that fit into the established parameters are
incorporated into the catalogue or universe of
investing shares. From this, and under econ-
omic/financial criteria, the fund managers
draw up the investment portfolio. In this
way, work is being carried out to analyse the
requirements the issuers of shares must meet so
that they can be considered ‘socially respon-
sible’. Rockness & Williams (1988) and Wil-
liams (1999) include the perceptions of fund
portfolio managers on these characteristics. A
recent study conducted by Eurosif (2003) tries
to identify the methodology used by European
fund managers for their investment decisions.
3. Company pre-selection methodology: The re-
search teams have developed different research
methodologies making up the three supports
on which ethical investments are based.
3.1. Selection filters (ethical screening), consisting
of applying social, moral, environmental or
ethical criteria to decisions on investing in
conventional instruments (shares, investment
funds, etc.). Generally, they are expressed as
negative criteria, which exclude certain in-
vestments, and positive criteria, whose aim is
to select those which behave best.
201
 Volume 13 Numbers 2/3 April/July 2004
3.2. Shareholder activism refers to direct dialogue
with the companies’ management teams,
making use of one of the basic and funda-
mental rights of all shareholders: to partici-
pate as a co-owner in making company
decisions through the right to vote. The
forms of action can be specified in three
directions: exercising the power to vote in
accordance with principles of social respon-
sibility, giving public information on the
basis of which voting is carried out, and
direct dialogue with the companies with the
aim of encouraging or supporting certain
resolutions.
3.3. Community investment, consisting of support-
ing a particular cause or activity through
investments, perhaps seeking a financial
return, but above all a social return. In
contrast to donations, investors demand a
return at least equal to the investment made.
These three investment selection methodologies
are not mutually exclusive. We see the use of one
or another more as an evolution of the social
responsibility of the control body or fund
managers than political decision criteria alone.
4. Ethical research teams/independent monitoring
institutions: To be able to implement these
investments, the collaboration of business
ethics centres or research teams is fundamen-
tal, as we have already indicated. These teams
may be integrated into the management itself
or be external; they are in charge of analysing
the behaviour of the companies present in the
market and their aim is to draw up a report on
the activities and business conduct connected
to each fund’s ethical investment policy.
Apart from the ethical research teams, in order to
be able to guarantee to investors that the fund is
managed coherently with the criteria established
by each of them, a monitoring institution such as
an Ethics Committee is usually created. The
monitoring institution is not always included in
the fund rules. It is in charge of checking that the
investments made are consistent with the criteria
established beforehand.
202
One of the main factors that has encouraged the
development of these investments in many coun-
tries, has been the wide media coverage received
after creation of monitoring institutions and
bodies. The appearance of specialised publica-
tions and the drawing up of social rankings has
also been important. These bodies could be
classified by their main activity related to SRI:
promoting bodies (e.g. SIF, UKSIF), commercial
SRI screening services (e.g. EIRIS, KLD, NIS,
FINASOL, ETHIBEL, SiRi Group), and bodies
that coordinate social activism and monitor
corporate governance (e.g. ICCR, some NGOs
like EsF in Spain).
The role of investors in SRI funds
Socially responsible investors are heterogeneous:
individuals, companies, universities, religious in-
stitutions and other organisations without purely
profit-making aims. These investors seek to invest
in companies committed to social and environ-
mental criteria making positive contributions to
society, rejecting investments in companies whose
policy puts business interests before the well being
of society.
The position on investing or disinvesting in
companies whose attitudes are incompatible with
the values of the fund does not usually become an
active attempt to alter social policies. In countries
where ethical funds are not highly developed, only
on rare occasions do the funds inform the
companies of the reasons for their decisions or
take part in management bodies. Some investors in
ethical funds maintain that active participation
in decisions would be a more effective way of
modifying business conduct than the mere isolated
action of investing or disinvesting in certain
companies. Studies like those by Fortune (1993),
Gilson & Kraakman (1991), Holderness & Sheehan
(1988), Pound (1988), Smith (1996) and Turban &
Greening (1997), show that active participation on
the part of socially responsible investors can make
companies rethink their policies and strategies with
respect to social and environmental issues and,
consequently, improve their social performance.
From this perspective, the work of Lewis &
Mackenzie (2000b), who used survey methodol-
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 Business Ethics: A European Review
ogy, should be highlighted. They analyse the
capacity of investors to act as a pressure group
to improve the position in terms of CSR. The
existence of a fundamental difference in the way
of managing ethical funds in the US and in the
UK can be drawn from this research.
In the US, investors invest in companies with
little ethical and environmental commitment, but
they later try to change their policies for action
through active commitment. In the UK, investors
avoid becoming involved with companies in which
there are no clear ethical commitments in their
initial premises or which do not maintain an ethical
commitment in their investments – although recent
research suggests the increasing use of engagement
among UK social responsible investors. Sparkes
(2002) still observes differences in the way of
managing this engagement between UK and US
fund managers though. He defines this attitude in
the UK as a combination of activism and quiet
diplomacy. Miles et al. (2002) remark that share-
holder activism has not been heavily used by the
SRI sector as a method of influencing corporate
behaviour. UK investors prefer to conduct their
engagement in more reserved ways.
Lewis & Mackenzie (2000a), in a previous
study, analysed the rational conduct of investors
and indicated that investors who support ethical
criteria are not ‘saints’ when it comes to choosing
the composition of their portfolios, nor are those
who do not support ethical criteria ‘devils’. They
conclude that this result is the dichotomy between
principles (ethical criteria) and money, and that
investors act in accordance with a financial
psychology that determines their rational financial
conduct. Along these lines, the work of Drexhage
(1998), in a survey of 50 financial advisers,
underlines that people who invest ethically do so
largely motivated by their conscience, but also
observes that a large proportion of the people
who invest do not know that they can invest their
money ethically. Lewis & Webley (1994) also
showed this change of attitude using a question-
naire to 100 investors formulated to simulate
hypothetical investment decisions. They observed
that the majority of investors showed an attitude
revealing a positive predisposition to make social
and environmental investments.
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Hollingworth (1998) analysed the Australian
ethical funds market. An aspect to be highlighted
in this study indicates the differences detected
between investors’ and fund managers’ objectives.
Surveyed investors chose to accept a smaller
return from the ethical investment in exchange
for obtaining a social or environmental improve-
ment effect. However, the ethical fund managers
themselves maintained that ethical investments
are not charity works and that investors must try
to obtain the best return, as would be required by
any other investment.
The undoubted fact emerging from the litera-
ture (Teoh & Shiu 1990, Coffey & Fryxell 1991,
Lewis & Webley 1994, Calian & Booth 2000,
Statman 2000, White 2000, Bonvin & Dembinski
2002) is that the success and growth of ethical
funds depends largely on investors and the
pressure they put on the managing institutions.
This pressure makes the economic agents change
their decisions or, at least, take social and ethical
aspects into account before making them.
In parallel with this, the so-called ‘constructive
dialogue’ that emerged in the US is currently
expanding in the other markets. It is a question of
taking another step towards encouraging finan-
cially responsible attitudes and is not limited to
discriminating between some companies and
others when it comes to investing.
The opinion of shareholders (who have a voice
and vote in general meetings depending on the
number of shares they possess) is acquiring
greater relevance and importance in company
decision-making. Nowadays in the US, share-
holders present hundreds of resolutions on social
and environmental practices every year, thereby
influencing company strategy. This pressure,
normally combined with public information
campaigns, encourages and compels the adoption
by companies of social and environmental codes
and other signs of responsible conduct.
We are, therefore, witnessing a structural change
in the perception of how businesses should be run
and the degree of awareness and commitment they
should show towards society. As Burton (1998)
states: ‘Social investment may be a good way
towards dialogue between companies and society.’
Moreover, an attempt must be made to bring
203
204
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Table 1: Research on Investor Motivation

Authors Aim Methodology Conclusions
Lewis & Mackenzie (2000a) Behaviour and preferences of Survey of investors Ethical investors act according to a financial
Volume 13

‘ethical’ investors. psychology which determines their ethical

Lewis & Mackenzie (2000b) Ethical investor attitude in the
UK and US.
Drexaghe (1998) Profile of ethical investors in
the UK.
Lewis & Webley (1994) Ethical investor attitude in the
UK.
Hollingworth (1998) To analyse the profile of
Australian ethical investors.
conduct.
Survey of investors Difference in the preferences of ethical
investors in the US and the UK.
Survey of financial advisers Ethical investors in the UK act according to
their conscience. Support for the ethical issue.
Questionnaire Investors show a positive attitude towards
social and environmental investment.
Questionnaire Investors who invest ethically do so attracted
by the ethical profile of the fund.
Numbers 2/3 April/July 2004

...............................................................................................................................................................................

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 Business Ethics: A European Review
together the power of investment for something
more than obtaining money. According to Stat-
man (2000), we should seek an ‘added value’ from
our investments that would enable an improve-
ment to some aspects of our society, and ethical
funds may be a good instrument for doing it.
In Table 1, we include the outstanding features
of the most important empirical research that has
been carried out on investor motivation.
The establishment of investment criteria
At the heart of ethical investment funds are the
various filters applied when it comes to selecting
investments, which depend in their turn on the
number and scope of the criteria selected. How-
ever, if we analyse the ethical criteria by countries
some fundamental differences can be observed.
It is important to underline the fact that an
ethical fund incorporates certain values in its
portfolio should not be interpreted as a rejection
of the ethical, social or ecological nature of the
companies not included in that fund. It means
that the fund guarantees to its customers that the
companies appearing in its portfolio meet certain
minimum standards or correspond to ethical
criteria, but clearly without judging the companies
that do not.
In this sense, the establishment of criteria in
ethical funds is subject to a set of rules and
principles that attempt to clarify them and give
them the maximum transparency. Among these,
we can highlight the following (Joly 1993):
 General rejection principle refers to not invest-
ing in companies or sectors whose activities
conflict with society’s moral requirements (e.g.
drug trafficking, child pornography).
 Controversial issues principle, when an invest-
ment goes against the moral requirements of
an important social group, the fund must
identify and exclude these investments (e.g.
nuclear energy, tobacco, the arms trade).
 Prudence principle refers to the fact that all
aspects of companies must be evaluated so
that all their relevant results – on the environ-
ment, on people – can be identified.
r Blackwell Publishing Ltd. 2004
 Negligence principle refers to the fact that
ethical fund managers must pay attention to
all the consequences of their decisions. Ignor-
ance cannot be used as an excuse.
Mackenzie (1997, 1998) distinguishes between two
types of ethical funds depending on the approach
they take to choosing their criteria. He differenti-
ates funds born from ethical, social or environ-
mental concern from those which simply offer
investments with these orientations, not from
personal conviction but as a commercial strategy.
 ‘Market-led’ funds are those that choose their
ethical criteria based on their perception of
market demand. That is to say, they choose
their ethical criteria because they identify what
they believe ethical investors want, not be-
cause the fund has ethical reasons for choosing
them. These funds seek to position themselves
respecting the main ethical criteria, but with-
out using ethical arguments.
 ‘Deliberative’ funds are those that choose their
criteria based on ethical reasons rather than
corporate practice and the choice of their criteria
includes a process of ethical deliberation.
The conclusions reached by Kaidonis (1999) and
Van Der Laan (2001), who analyse the Australian
market, are important. They observe a lack of
uniformity in the social pre-selection criteria for
ethical funds. As a consequence, they indicate that
this lack of uniformity makes it difficult to select
the companies that can be part of ethical funds.
When it comes to deciding what the criteria
defining ethical investment would be, Taylor
(2001) goes further than stating the differences
between the criteria used by ethical funds and
seeks to define the theoretical framework under
which the concept of ethical investment has been
established. Taylor indicates that ethics in invest-
ment is understood as different from investment
in general and that many investors consider it an
idealist attitude or even a utopia when it comes to
reforming existing practices or changing values.
However, it is precisely because of this desire for
change, which must be the source for improve-
ments in society and for growth in all senses, that
they do not merely remain utopian dreams.
205
 Volume 13 Numbers 2/3 April/July 2004
Socially responsible investors must act as the main
activists and upholders of their principles, foster-
ing not only ethical investment, but also the
establishment of regulatory measures that enable
the fulfilment of the ethical criteria. In Table 2, we
summarise the basic elements of the research
carried out to analyse ethical criteria.
Regulatory impulses of ethical investment funds
The consolidation of socially responsible invest-
ment has been driven in recent years by the
development of important political, institutional
and financial mechanisms. At an international
level, initiatives like the Global Compact on
Social Responsibility (2000) promoted by the
UN, the OECD directives for multinational
companies (1999), the Tripartite Declaration of
the ILO on international companies and social
policy (1977–2000), the AA-1000 standard created
in 1999 by the Institute of Social Ethical
Accountability and the SA-8000 promoted by
the Council on Economic Priorities accreditation
agency, are providing evidence of the importance
this concern is acquiring to provide consumers
and investors – and all interest groups in general –
with information about the social and environ-
mental responsibility of companies in the inter-
national sphere.
The OECD directives for multinational compa-
nies make up the most exhaustive set of inter-
nationally agreed rules on the activities of
multinationals. To promote CSR in developing
companies, EU companies must show and give
information about their adherence to these rules
throughout the world. Secondly, independently of
CSR, governments must encourage compliance
with certain international agreements. The need to
ensure respect for these rules in the context of
globalisation and, in particular, their universal
nature, as well as the need to adopt codes of
conduct to integrate the basic ILO agreements, is
underlined in the paper entitled ‘Promoting basic
standards for work and improving social govern-
ance in the context of globalisation’ (Ria &
Oomen-Ruijten 2002).
In addition, the recognition by the Council of
Europe in Stockholm, to create a dynamic and
206
efficient European stock market (Commission of
the European Communities, 2001 Green Paper) is
outstanding. This is because, in this context, the
market indices identifying the companies with the
best social and environmental results will become
increasingly necessary for launching ethical funds.
Alongside this, the definition of common
frameworks to encourage the global dimension
of CSR is a challenge taking into account the
diversity of national policies, the protection of
workers and regulation concerning the environ-
ment. European companies are taking part in
various initiatives, like Investors for Africa, World
Business at the Global Level and the Council for
Sustainable Development. The European Union
has taken an important step with the publication
of its Green Paper ‘Promoting a European Frame-
work for Corporate Social Responsibility’ (Com-
mission of European Communities 2001),
encouraging the participation of all relevant
sectors of society in a structured debate.
Along these same lines is the White Paper on
‘Environmental Responsibility’ (Commission of
European Communities 2000) which deals with
the possibilities of setting up a system of environ-
mental responsibility in order to improve the
application of the environmental principles in-
cluded in the EC Treaty and Community envir-
onmental legislation which attempts to ensure the
conservation of the environment.
SRI funds in Spain
In Europe, the first ethical fund launched was the
Arktie-Ansvar Sverige Fonden in Sweden in 1965
(Kreander 2001), but the country that has
pioneered social responsible funds is the UK,
where the success and development of these
products has been considerable.1 During the
period 1994–1999, the capital invested in a
socially responsible way grew by approximately
400%, while the conventional funds sector grew
by 200% (EIRIS 1999). The UK also managed
the majority of SRI assets with nearly 32% of the
total European SRI retail assets (SiRi Group
2003).
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Table 2: Outstanding Aspects of the Research on the Analysis of Ethical Criteria

Authors Aim Conclusions
Joly (1993) To analyse ethical criteria. Establishing principles and rules that must be followed by
ethical funds in their criteria.
Argandoña & Sarsa (2000) To analyse ethical funds and the promotion of investment The fact that an ethical fund incorporates ethical criteria in
ethics. its portfolio must not be interpreted as a rejection of the
ethical character of companies not included in the fund.
Mackenzie (1998) To analyse whether ethical funds have different Distinguishes between:
approaches to choosing ethical criteria.  ‘Market-led’ funds: based on perception of the market.
 ‘Deliberative’ funds: including a process of ethical
deliberation.
Cowton (1999) To describe the development of ethical funds. In the face of criticism of the possible ‘subjectivity’ of ethical
criteria, points out the important work carried out by bodies
like EIRIS and KLD.
Lewis & Mackenzie (2000a) To analyse the perception of conduct considered as An attempt is made, with the description of ethical criteria,
ethical. to evaluate not only the consequences of companies’
actions, but also the principles that motivate them.
Kaidonis (1999), Van Der Laan (2001) To analyse the ethical criteria of ethical funds in Australia. Lack of uniformity in the social pre-selection criteria for
Business Ethics: A European Review

ethical fund portfolios.

Taylor (2001) To define the theoretical framework for ethical investment. Utopia and ethics: Ethical investors must foster the
establishment of regulatory measures that enable the
established ethical criteria to be met.
...............................................................................................................................................................................

207
 Volume 13 Numbers 2/3 April/July 2004

In Spain, ethical investment funds are still an provided by Spanish companies. Further research
incipient sector of investment. Although the on the equities selected by Spanish SRI funds is
sector showed considerable growth between 1999 presented below where we analyse the social
and 2001 (Table 3), short-term future perspectives performance of Spanish SRI funds.
lead to forecasts that the sector will not develop to The ethical and socially responsible investment
such an important extent as it has in other policy of SRI funds in Spain must be included in
European countries. The last 2 years show a the fund’s leaflet. The pre-selection of the invest-
downturn of SRI funds, if we compare the assets ment universe of assets is done using a list of
under management with total assets managed by criteria. Generally, they are expressed as negative
Spanish UCITS funds.2 In Europe (SiRi Group criteria which exclude certain investments, and
2003) the percentage rises to 0.36% of total assets positive criteria whose aim is to select those which
managed by UCITS funds. behave best. From an analysis of Spanish SRI
Table 4 shows the typology of Spanish SRI funds’ leaflets, Table 5 shows some of the positive
funds. When examining SRI asset distribution it is and negative criteria most commonly used by
interesting to highlight the percentage of balanced Spanish SRI funds. We note that the level of
and fixed income funds, against European trends. detail given for these criteria is very limited. They
(More than 65% of assets under management in are generic ones, if we compare them with the
European SRI funds are equity, according to SiRi detailed criteria of some other European SRI
Group (2003).)3 funds (Kreander 2001).
As far as the location of assets is concerned, it is Guardado (2001), in a brief paper which
worth noting that all the funds belong to compares the evolution of SRI among countries,
international categories instead of national ones. observes that, in the US, the criterion most
The reason could be the lack of CSR information commonly used when it comes to excluding
companies to invest in is tobacco. Approximately
...............................................................
96% of funds include it as an exclusion criterion.
Table 3: Assets Under Management (million Euro) Following it in frequency of use are: gambling,
Year SRI funds (1) UCITS funds (2) (1)/(2) % alcohol, arms and environment, and the last is
1999 63.0 206.195 0.03 used as a positive criterion. In Spain as shown in
2000 215.0 182.842 0.12 Table 5 the criteria most commonly used by
2001 367.6 177.849 0.20 ethical funds are the environment (positive
2002 256.4 170.814 0.15 criterion), used by 92% of funds, and arms
2003n 210.8 175.582 0.12
(negative criterion), used by 56%.
n
March 31 In the UK the most commonly used pre-
Source: Own creation from Inverco data (www.inverco.es).
selection criteria concerning the ethical policy of
...............................................................
ethical and socially responsible funds advocate the

......................................................................................................................................

Table 4: Typology of Spanish SRI Funds

2001 2002 2003n
Global 1.22 1.13 1.17
International equity 0.79 0.49 0.45
International balanced (more 33% equity assets) 21.73 20.16 19.65
International balanced (less 33% equity assets) 11.31 13.06 13.45
International fixed income 64.95 65.15 65.28
Total 100 100 100
n
March 31.
Source: Own creation from Inverco data (www.inverco.es).
......................................................................................................................................

208 r Blackwell Publishing Ltd. 2004

 Business Ethics: A European Review

......................................................................................................................................

Table 5: Positive and Negative Selection Criteria Most Commonly Used by Ethical Investment Funds
for Pre-selecting the Companies that will Form Part of their Portfolios
Negative or excluding criteria Positive or valued criteria

Arms (6) Equality of opportunity (3)

Gambling (2) Recycling (2)
Exploitation in the Third World (4) Saving energy and preserving natural resources (4)
Pollution (3) Transparency in information (3)
Genetic manipulation (3) Commitment to solidarity with society (2)
Pornography and sexual exploitation (2) Controlling pollution (2)
Tobacco (4) Safety at work (3)
Alcohol (1) Support for training and education (3)
Environmental degradation (3) Company investments (1)
Nuclear energy (2)
Source: Own creation from the analysis of 12 Spanish SRI fund information leaflets.
Number of Spanish funds with this criterion in parentheses.
......................................................................................................................................

exclusion of certain production sectors like the
tobacco, alcohol, arms and nuclear energy sectors,
environmental management, etc. In addition,
special attention is paid to animal rights: most
funds avoid investing in companies that provide
animal experiment services. On the other hand,
companies which have established industrial
relations support programmes and which take
into account health, job security, women’s rights,
etc, are positively valued (IPES 2002). This
tendency has also been observed in the rest of
Europe.
One of the main problems faced by financial
managers is the lack of harmonisation of ethical
criteria among countries. According to a study
recently carried out by CSR Europe, 79% of the
European investors and financial analysts sur-
veyed indicate that harmonising the ethical
criteria used to classify companies would be very
useful for selling this type of investment (CSR
Europe 2001).
In order to identify the positive and negative
criteria of Spanish ethical funds, IPES (2002) has
carried out research on the negative ethical
criteria applied in Spain. The aim of the IPES
research has been to find out the way in which
each fund works in applying each of its negative
criteria. In order to do this, the application of
these criteria in other countries has been taken as
a reference. For example, the criterion excluding
the defence industry has a very wide operational
margin. In this sense, the operational margin of a
criterion depends, in all cases, on the way in which
each manager defines the various operational and
exclusion profiles.
In its second section, the IPES research
attempts to show how these operational profiles
are translated into a concrete form in the number
and names of companies excluded from the
universe of investable shares. Thus, managers
have been asked for the number of companies
excluded, on the one hand from all stock markets
and, on the other, from the Spanish market
concerning the exclusion of Ibex 35 companies.
As a result, it is observed that in Spain there is
no explicit application of the mechanisms and
techniques used in the pre-selection of the
portfolio. As for the second objective, the impact
of the exclusion of companies will only be seen in
a material form in their CSR policies if they are
informed of the exclusion. It is after companies
have been informed about their exclusion from
the share portfolio that the impact on their
procedures can become significant. The aim of
managers is that companies which may be
incorporated into investment portfolios are aware
of the policies and attitudes that socially respon-
sible investors expect of them and again, concern-
ing the second objective, a considerable deficit is
observed among Spanish companies.

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 Volume 13 Numbers 2/3 April/July 2004
Another important problem facing the sector is
the mentality of investors themselves. A large
proportion of participants are not aware that the
return they can get from ethical funds is the same
as from any other fund of the same category and
similar management. In this sense, it does not
appear that managers have developed strategies
for publicising and promoting ethical funds in
society in general, and in the financial sphere in
particular. The limited development of these
funds in Spain is caused, above all, by the low
level of development of instruments and profes-
sional groups for researching mutual funds, in
order to be able to support ethical research into
those funds (IPES 2002).
However, recent research (Gismera & Vaquero
2000) has shown that nine out of ten Spaniards
would be prepared to pay a higher price for a
product that set aside part of its price for a social
project, compared with seven out of ten who
would do it for a green product. Furthermore, as
far as investors are concerned, the opinion poll
carried out by Mckinsey & Company (2002)
shows that the Spanish market would be prepared
to pay an average premium of 14% for companies
with good corporate governance.
Finally, the Spanish regulatory legislation
focuses only on corporate governance issues
(Olivencia 1998, Aldama 2003). In Spain, in
November 1999, INVERCO4 presented the Cir-
cular on the use by Mutual Fund Institutions of
the denominations ‘ethical’, ‘ecological’ and any
other concerning aspects of social responsibility.
This circular was approved by the CNMV
(National Stock Market Commission) and its
objective is to define the criteria that investment
funds must meet to be able to include these terms
in their denomination. Ethical and ecological
funds are defined in it as those choosing their
investments through a series of ethical, environ-
mental and ecological criteria, while solidarity
funds (shared funds) are those which give a
percentage of their management commission to
certain beneficiary non-governmental organisa-
tions, without any ethical concern in asset
management.
The INVERCO circular does not correspond
to a governmental legislative framework and,
210
although the circular concerns the use of ethical
and ecological concepts, it has not been drawn up
in order that managers should take a proactive
attitude in favour of the adoption of ethical
criteria in pre-selecting their portfolios.
In order to standardise this situation and to give
greater transparency in ethical funds’ policies for
action, AENOR (Spanish Standardisation and
Certification Association) has drawn up a stan-
dard: ‘Ethics. Requirements for ethical and
socially responsible financial instruments’ (PNE
165001 EX), which specifies the requirements
which must be met by the different ethical and
socially responsible financial instruments created
and sold by any organisation legally permitted to
do so.
The aim of this UNE standard is to certify that
ethical and social investment products act in
accordance with certain parameters and invest in
companies also considered socially responsible.
The standard includes two levels of requirements
demanded of a financial instrument, so it can be
considered ethical and socially responsible. There
are two levels of compliance: the first level refers
to basic, general criteria common to all ethical
and socially responsible financial instruments.
The second level specifically determines the
intrinsic features with which each type of ethical
and socially responsible financial instrument must
comply.
................................................................
Table 6: IBEX 35 Companies Forming Part of Ethical
Indices (8/11/2003)
IBEX 35 FTSE4 Dow Jones ethibel
company Good sustainability sustainability
index
BBVA X X
SCH X X
Inditex X X
Telefónica X
Gas Natural X X
Bankinter X
Iberdrola X
Endesa X
Ferrovial X X
Source: Ethical indices web pages.
................................................................
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 Business Ethics: A European Review
Besides these two levels, ethical and socially
responsible financial instruments have been
formed around three operational mechanisms:
1. Ethical screening, an indispensable mechanism
for applying the ethical criteria of the instru-
ment.
2. The influence of shareholders: the shareholder
activism.
3. Investment favouring solidarity: shared funds.
These last two mechanisms, although not required
for the classification as an ethical and socially
......................................................................................................................................
Table 7: General and Specific Requirements for the Social Rating (AENOR UNE Standard)
General requirements
1. Establishes an ethical ideology.
2. Establishes an ethics committee.
3. Selects companies by applying ethical screening.
4. Guarantees to customers and users that the selected
ethical criteria are met.
5. Adopts objectives of transparency in management and
communication.
6. Fosters social responsibility in management and in the
companies.
7. Makes meeting the ethical requirements compatible
with a reasonable return.
8. The fund, the price and the commission are ethical.
Specific requirements evaluation
9. Supplies information to the participants about ethical
aspects of companies.
10. Details to participants the aid the fund gives to NGOs
and other non-profit organisations.
......................................................................................................................................
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responsible instrument, help in optimising social
impact.
However, as a continuation of this standardisa-
tion phase, AENOR has elaborated a second
UNE standard (currently at the public consulta-
tion phase) called ‘Systems of ethical management
of organisations. Requirements for exercising
ethical and social responsibility’, which refers to
companies. This standard attempts to certify
companies with socially responsible conduct in
aspects like relations with workers, with share-
holders and with suppliers within a framework of
respect for human rights and for the environment.
Evaluation
Must be met. Together with requirements 2, 4 and 8 it
means Ethical fund, if not, Solidarity.
Must be met.
Positively valued, following the criteria below:
 Classification ‘II’: indicates that more than 75% of the
equity under fund management (both national and
international) are included in the ethical indices
analysed.
 Classification ‘I’: indicates that between 50% and 75% of
the equity fund management (both national and
international) are included in the ethical indices
analysed.
 No classification: indicates that the percentage of equity
belonging to ethical indices under fund management
(both national and international) is lower than 50% and
therefore no classification has been allocated.
Must be met.
Means compliance with the AENOR standard (given that
this standard has only been applied for a short time, this
requirement will not be taken into account for the moment in
the evaluation).
Positively valued (classification n).
Positively valued. We have used financial performance as a
support7 (classification n).
Must be met.
Positively valued (classification n).
Positively valued (classification n).
211
 Volume 13
......................................................................................................................................
Table 8: Results of the Analysis of the Social Performance of Spanish Ethical and Solidarity Investment Funds
CNMV Register
Establishes and ethical Establishes an ethics
ideology committee
BBVA Solidaridad, FIM No ethical ideology
Classification: SIInn has been established
because it is a
solidarity fund.
(Does not comply)
BSCH Solidaridad, FIM The ideology is
Classification: EIInn established.
(Complies)
BNP Fondo Solidaridad, The ideology is
FIM Classification: EIInn established.
(Complies)
FonCaixa Cooperación, The ideology is
FIM Classification: EIn established.
(Complies)
Fondo Etico, FIM The ideology is
Classification: EIInnn established.
(Complies)
Fondo Solidario Pro The ideology is
Unicef, FIM established.
Classification: EIIn (Complies)
Renta 4 Ecofondo, FIM The ideology is
Classification: EInnn established.
(Complies)
Ahorro Corporación Arco There is no ethical
Iris, FIM Classification: ideology as such, but
Sn (Green) some positive pre-
selection criteria are
established.
(Does not comply)
Bankpyme Green Fund The ideology is
Classification: E n
established.
(Complies)
Santander Solidario, FIM The ideology is
Classification: EIIn established.
(Complies)
El Monte Fondo No ethical ideology has
Solidario, FIM been established
Classification: Sn because it is a solidarity
fund.
(Does not comply)
Caixa Catalunya No ethical ideology has
Solidari, FIM been established
Classification: Sn because it is a solidarity
fund.
(Does not comply)
......................................................................................................................................
212
Numbers 2/3 April/July 2004
General requirements
Selects companies by Guarantees to Adopts objectives of
applying ethical customers and users transparency in
screening that the selected management and
ethical criteria are met communication
(not used for the
performance)
There is a Monitoring Although it does not Not necessary, as it is a Gives information to
Committee, but no show ethical screening solidarity fund. institutions benefiting
ethical research is as such, 76.36% of the (Does not comply) from the development of
carried out. companies forming the fund and on the
(Does not comply) part of the equity fund investment policy
(both national and followed.
international) are
included in the ethical
indices analysed.
(Complies)
Yes, there is an Ethics The selection of shares Yes, it is guaranteed. They do not have the full
Committee and a is carried out by (Complies) ethical ideology
Monitoring and Advisory consulting ethical indices accessible.
Committee. 94.94% equities belong
(Complies) to EI. (Complies)
Yes, there is an Ethics An analysis is carried out
Yes, monitoring of the They do not have the full
Committee and a of companies from the criteria is carried out ethical ideology
Monitoring and Advisory fund’s ethical criteria. periodically, enabling accessible.
Committee. (Complies) 78.38% equities belong investments to be
to EI. (Complies) selected or excluded
from the fund.
(Complies)
Yes, there is an Ethics An overall analysis of Yes, monitoring of the They do not have the full
Committee and a companies is carried out objectives fixed in the ethical ideology
Support Committee. based on the pre- fund’s ethical policy is accessible.
(Complies) selection criteria. carried out periodically.
71.73% equities belong (Complies)
to EI. (Partly complies)
Yes, there is a Yes, it is carried out. Yes, monitoring of the They do not have the full
Committee and an 86.54% equities belong objectives fixed in the ethical ideology
Ethics Committee. to EI. (Complies) fund’s ethical policy is accessible.
(Complies) carried out. (Complies)
Yes, there is an Ethics Yes, it is carried out. Yes, with special They do not have the full
Committee and one for 82% equities belong to attention to checking that ethical ideology
Monitoring. (Complies) EI. (Complies) it complies with the accessible.
investment limitation
established by UNICEF.
(Complies)
Yes, there is an Ethics An overall analysis of Yes, detailed monitoring They do not have the full
Committee and an companies is carried out of the degree of fit ethical ideology
Advisory Council. by the ethics committee between the investment accessible.
(Complies) 67.86% equities belong policy and the fund
to EI. (Partly complies) criteria is carried out.
(Complies)
Does not exist. It is not carried out. Does not exist. Does not say, it is a
(Does not comply) (Does not comply) (Does not comply) solidarity fund.
Yes, there is an Ethics Not available. An analysis of They do not have the full
Committee and one for compliance with the pre- ethical ideology
Monitoring. (Complies) selection criteria for accessible.
shares is carried out.
(Complies)
Yes, there is an Ethics Yes, one of the functions Yes, checks are made They do not have the full
Committee and one for of the ethics committee whether there are in the ethical ideology
Monitoring. (Complies) is to determine the ‘non- portfolio shared in accessible.
suitability’ of a particular companies which go
share to be included in against the fund’s
the fund’s portfolio. principles. (Complies)
94.74% equities belong
to EI. (Complies)
Does not exist because it Does not say, as it is a Not necessary, as it is a Does not say.
is a solidarity fund. solidarity fund. solidarity fund.
(Does not comply) (Does not comply) (Does not comply)
Does not exist because it Does not say, as it is a Not necessary, as it is a Does not say.
is a solidarity fund. solidarity fund. solidarity fund.
(Does not comply) (Does not comply) (Does not comply)
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 Business Ethics: A European Review

......................................................................................................................................

General requirements Specific requirements

Fosters social Makes meeting the The fund, the price and Supplies information to Details to participants
responsibility in ethical requirements the commission are the participants about the aid the fund gives to
management and in compatible with a ethical the ethical aspects of ethical organisations
companies reasonable return companies

No evidence. Yes, but with differences. Yes (commissions are Does not say. BBVA Solidaridad reports
(Does not comply) During 2002, return was minimal using Spanish (Does not comply) half yearly and annually on
4.19%. (Sector average: fund legislation). the amount of donations
7.13%.) Less than 2%. made to the different
(Complies) (Complies) NGOs.
(Complies)
No evidence. Yes, but with differences. Yes (commissions are Yes, it provides Does not say.
(Does not comply) During 2002, return was minimal using Spanish information. (Does not comply)
3.91%. (Sector average: fund legislation). (Complies)
7.13%.) Less than 2%.
(Complies) (Complies)
No evidence. Yes, during 2002 return Yes (commission is Does not say. It will give information to
(Does not comply) was 7.46%. (Sector minimal). Less than 2%. (Does not comply) the amount given to
average: 7.13%.) (Complies) Cáritas Española in reports
(Complies) to participants.
(Complies)
No evidence. Yes, but with differences. Yes (commission is Does not say. Does not say.
(Does not comply) During 2002, return was minimal). 2.25%. (Does not comply) (Does not comply)
19.1%. (Sector average: (Complies)
26.33%.)
(Complies)
No evidence. Yes, during 2002 return Yes (commission is Yes, the inclusion or Yes, on the web page there
(Does not comply) was 7.97%. (Sector minimal). Less than 2%. exclusion of companies is is a space for
average: 7.13%.) (Complies) communicated. communication with
(Complies) (Complies) participants.
(Complies)
No evidence. No, during 2002 return was Yes (commission is Does not say. This is communicated to
(Does not comply) 5.83%. (Sector average: minimal) Less than 2%. (Does not comply) participants.
26.33%.) (Complies) (Complies)
(Does not comply)
Yes, among other Yes, during 2002 return Yes (commission is Does not say. There is rigorous
functions it proposes future was 31.3%. (Sector minimal) 2.38%. (Does not comply) monitoring in which
investment criteria and average: 35.88%.) (Complies) donations given by Renta 4
suggestions to improve the (Complies) to the beneficiary
working of the fund. institutions is checked and
(Complies) the participants are
notified.
(Complies)
No evidence. Yes, during 2002 return Yes (commission is Does not say. Does not say.
(Does not comply) was 35.3%. (Sector minimal) 2.08%. (Does not comply) (Does not comply)
average: 35.88%.) (Complies)
(Complies)
No evidence. Yes, during 2002 return Yes (commission is Does not say. Does not say.
(Does not comply) was 30.1%. (Sector minimal) Less than 2%. (Does not comply) (Does not comply)
average: 33.99%.) (Complies)
(Complies)
No evidence Yes, during 2002 return Yes (commission is Does not say. Does not say.
was 7.03%. (Sector minimal) Less than 2%. (Does not comply) (Does not comply)
average: 7.13%) (Complies)
(Complies)
No evidence Yes, but with differences. Yes (commission is Does not say. Does not say.
During 2002, return3 was minimal). Less than 2%.
5.88%. (Sector average: (Complies)
-7.13%.)
(Complies)
No evidence No, during 2002 return was Yes (commission is Does not say. Participants receive a
2.69%. (Sector average: minimal) Less than 2%. (Does not comply) leaflet detailing the projects
7.13%.) (Complies) which each of the
(Does not comply) beneficiary bodies plans to
develop with the donations
received.
(Complies)
......................................................................................................................................

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 Volume 13 Numbers 2/3 April/July 2004
The aim is to get ethical mutual fund institutions,
both at home and abroad, to channel their
investments towards Spanish companies; an im-
portant aspect since this sector is highly developed
in the United States and involves an opportunity
for attracting foreign capital on to the Spanish
stock exchange.
Social performance of ethical investment
funds in Spain
In the previous section we have presented the
situation of SRI funds in Spain, not only their
figures, but also the stage of development in
research and regulation. In this section, using
public information provided by funds, we present
an analysis of the social performance of Spanish
ethical investment funds with reference to the way
the investment fund managers apply various
social responsibility criteria.
The majority of studies that analyse the
relationship between social and financial perfor-
mance (e.g. Griffin & Mahon 1997, Moore 2001,
Simpson & Kohers 2002) focus on measuring
both results for the share issuing company, but do
not analyse the conduct of ethical funds in social,
ethical or environmental terms. The analysis of
the social performance of funds is being carried
out by institutions like NIS Inc. or Corporate
Monitor. Corporate Monitor produces ratings on
ethical funds, conducting investment research on
ethical funds’ non-financial performance, using
public information, investigating the ethical pol-
icy, style and application of each fund and
integrating this into the overall fund rating. For
conducting our research we have followed this
methodology of analysis, using public informa-
tion and elaborating a rating, using the criteria of
the Spanish experimental standard for ethical
investments.
In order to analyse the social performance of
Spanish SRI, we present an evaluation of the
investment policy each of the funds has carried
out. We have generated the database from the
ethical investment funds managed in Spain on 31
January 2002, using 12 funds.5 To obtain data we
have used the CNMV’s quarterly mutual fund
214
reports, fund leaflets and information provided by
the different management institutions.
In order to fix a starting point we have analysed
the directives established by AENOR’s UNE
standard on ‘Requirements for socially responsi-
ble and ethical financial instrument’. Furthermore
the level of compliance by Spanish ethical and
solidarity funds with these requirements has been
evaluated. A detailed analysis has been made for
each of the funds. An analysis has also been made
of the composition of the ethical fund portfolios
by analysing the composition of ethical indices of
recognised standing: the Dow Jones Sustainability,
both Stoxx and World, the FTSE4Good Europa
and the Global and Domini 400 Social Index.
From this analysis we have detected that most
Spanish SRI funds invest in Spanish equities only
if they belong to one of those ethical indices. At
present (Table 6) only nine of the 35 companies of
IBEX 35 belong to FTSE4Good, Dow Jones
Sustainability World or Ethibel Sustainability
Index. Column 4 of Table 9 shows the percentage
of equities (national and international) under
fund management that belong to these ethical
indices.
Table 7 details the explanation of the indicators
we have used in order to evaluate the social
performance of SRI in Spain. The first column
shows the requirements established in AENOR’s
UNE standard on ‘Requirements for socially
................................................................
Table 9: Proposal for rating the social performance of
Spanish SRI Funds
Funds Rating
Fondo Etico EIInnn
BNP Solidaridad EIInn
BSCH Solidaridad EIInn
Fondo Solidario Pro Unicef EIIn
Santander Solidario EIIn
Renta 4 Ecofondo EInnn
Foncaixa Cooperación EIn
Bankpyme Green En
BBA Solidaridad SIInn
Ahorro Corp. ARCO IRIS Sn
Caixa Catalunya Solidario Sn
El Monte Fondo Solidario Sn
................................................................
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 Business Ethics: A European Review
responsible and ethical financial instruments’ both
the general ones and the specific ones for funds.
The second column presents the evaluation we
have done of the importance of the different
requirements in the performance results, assigning
to each of these requirements either an exclusive
character or a weighting. Therefore some of the
criteria must be met in order to classify funds as
ethical or solidarity. Other criteria are used to
balance their degree of social performance. So the
maximum classification for an ethical fund would
be EIInnnn and, for a solidarity fund, SIInnnn.
Table 8 shows the results of applying the former
evaluation to 12 Spanish SRI funds. For example,
the fund’s classification for the social rating
criterion no 3 ‘Selecting companies through ethical
screening’ has been deduced from analysing the
composition of the equity fund portfolio. Due to
the lack of information about the screening
methodology used by most of these funds, we have
analysed the composition of portfolio funds and it
can be observed that the majority of the equities
under management form part of the ethical indices
analysed (FTSE4Good, Dow Jones Sustainability
and Domini 400) and there are only a few which do
not form part of these indices. We know that there
are some funds6 that have an ethical committee
which helps in the portfolio selection, but there is no
public information on how they work. That is why
ethical indices have been used as a benchmark.7
Considering the results (Table 9), it can be
concluded that four of the funds analysed are
solidarity funds, with BBVA Solidaridad the best
positioned (SIInn). Of the ethical funds proper, the
ones with the best social performance are the
Fondo Etico (EIInnn) and the BSCH Solidaridad
(EIInn).
Concerning the results obtained on social
performance, it should be pointed out that both
ethical and solidarity funds are, as a whole, well
positioned, although none of them manages to
achieve the maximum score. Among the ethical
group, the Fondo Ético FIM is outstanding,
followed by BSCH Solidaridad FIM and BNP
Fondo Solidaridad FIM. As for solidarity funds,
BBVA Solidaridad FIM is the best positioned
because, although it does not have ethical ideals,
in practice it carries out ethical management.
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Conclusions
The objective of this paper has been to explore the
situation of socially responsible funds in Spain,
and to offer an early proposal for measuring their
social performance. In Spain these funds are
classified as ethical and solidarity (shared) funds
by the supervisor body (National Stock Market
Commission). The first ones must have an ethical,
social or environmental ideology; the second ones
are those which give a percentage of their
management commission to certain beneficiary
non-governmental organisations, without any
ethical concern in asset management.
In Spain ethical investment funds are still an
incipient sector of investment. Their social re-
sponsibility managerial practices are in an early
stage of development. There is no explicit
application of the mechanisms and techniques
enabling the pre-selection of the portfolio to be
applied and they do not have an explicit policy of
engagement and voting. Although the sector
showed considerable growth between 1999 and
2001, it has not developed to such an important
extent as it has in other European countries.
Finally, the Spanish regulatory legislation focuses
only on corporate governance issues. There is not
a legislative framework concerning the use of
ethical and ecological concepts by socially re-
sponsible investors.
This lack of regulation and standards makes it
very difficult to unify criteria and to establish
ratings for SRI funds. However, in 2002, the ex-
perimental standard ‘Ethics. Requirements for
ethical and socially responsible financial instru-
ments’ (PNE 165001 EX) has been established by
consensus among the relevant agents. The explora-
tory analysis of the social performance of Spanish
SRI funds has been based on this experimental
standard and the level of compliance by Spanish
ethical and solidarity funds with these require-
ments.
Concerning the results, it should be pointed out
that both ethical and solidarity funds are, as a
whole, well positioned, although none of them
manages to achieve the maximum score. Among
the ethical group, the Fondo Ético FIM is
outstanding, followed by BSCH Solidaridad
215
 Volume 13 Numbers 2/3 April/July 2004
FIM and BNP Fondo Solidaridad FIM. As for
solidarity funds, BBVA Solidaridad FIM is the
best positioned because, although it does not have
ethical ideals, in practice it carries out ethical
management. These results should be considered
with caution not only because of the early stage of
the Spanish SRI market, but also regarding the
data availability and the methodology used.
Although there are comparative studies show-
ing the market situation of SRI funds among
European countries, the extension of the results
from this paper to other EU countries in order to
compare the social performance of European SRI
funds needs a consensus about the standards and
the instruments used to measure this performance.
Acknowledgements
We would like to thank the three anonymous
reviewers for their comments on an earlier draft.
Notes
1. Although the UK has the highest percentage of
European SRI assets, Sweden has more ethical
funds in relation to population than the UK
(Kreander 2001).
2. UCITS stands for ‘Undertaking for Collective
Investment in Transferable Securities’ which is a
collective investment fund that complies with the
EU UCITS Directive no 85/611/EEC of 20
October 1985.
3. Most SRI funds in Spain were created during
1999. It was a difficult year for the Spanish stock
market (very volatile, negative changes in taxes)
with a bearish trend until September. The beha-
viour of SRI funds was similar to the rest UCITS.
INVERCO data in this year show that more than
50% of the Spanish UCITS investments belong to
fixed income assets.
4. INVERCO is the Spanish Association of Invest-
ment and Pension Funds, and almost all Collective
Investment Institutions belong to it (mutual funds,
investment societies and pension funds). It is a
member of FEFSI (European Federation of
Investment Funds and Companies).
5. The funds Crédit Suı̈sse Equity Fund (Lux) Global
Sustainability and UBS Equity Fund Eco-Perfor-
216
mance have not been used in the analysis as,
although they are sold in Spain, they are not
managed or based in that country. The fund DB
Ecoinvest has also not been taken into account as
it was modified at the end of 2001 and does not
now maintain ethical criteria.
6. We want to point out that, although the results for
some funds show a good social performance by the
equity selection (screening) methodology, after
interviewing some members of ethical committees,
they pointed that they do the screening for the
fund, instead of using ethical indices. This situa-
tion could modify the results and make them
perform better than the results of our analysis, but
this information is not public.
7. Classical analysis of mutual funds focuses only on
the financial performance. In former studies,
Balaguer & Muñoz (2003) and Matallı́n &
Fernández (2002) have analysed the financial
performance of SRI funds in Spain and the results
show that they have had a good financial
performance compared with different benchmarks.
These results are available upon request.
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