Responsible Investor

He notes that many corporations were suspicious about Eiris’ intentions: “Some were more open, of course, and others told us straight that we would be better not to be invested if we had particular concerns. We’ve always held to the idea though that you want to invest in good companies and not just avoid bad ones.” Memorably, one company, Next, the UK clothing retailer, took Eiris to court: “Next decided they didn’t like the fact we had identified that they and their subsidiary Gratton had more advertising standards complaints upheld against them than any other company in the UK. They decided that we ought to be stopped. I came back from holiday to find a writ on my desk. However, we did establish the right to publish our findings.”
Webster says the companies that have been most hostile to Eiris’ research have often been those where there was some corporate problem in the offing: “We’ve had a couple of other lawsuit threats, but they have tended to come shortly before bigger issues at the companies themselves. It’s an interesting correlation.”
As issues of corporate responsibility and responsible investing have grown, so has Eiris. It now employs almost 50 staff including teams of researchers covering 2800 companies worldwide. Webster says its basic work is the same as in 1983, albeit much more sophisticated: “We continue to use research to help investors take a view on companies and we will make recommendations, but we are not there to tell investors what to think. We don’t have an all-purpose ‘grade’ for companies. It depends what an investor is trying to do. We encourage clients to say what issues are important to them and then help them to ‘weigh up’ these issues in regards to their investments, which we can now do through quite complex software.”

As well as sourcing information from CSR reports, press and NGO articles and judicial documents, Eiris goes direct to companies to ask the questions it deems unanswered: “The quality of the research depends on the rigour of the process and ensuring you don’t get fobbed off. There is a lot of impressive stuff these days in company CSR reports, even if you have to say that in some areas such as climate change even the highest impact companies are doing enough to meet what politicians and scientists are saying is needed. If all companies mirrored the best operators, then investors could sleep easily. But while it’s only a minority, they can’t.” Notably, Eiris does the company research for the FTSE4Good index and has published numerous reports on issues as diverse as obesity and corruption.

“We encourage clients to say what issues are important to them.”

Webster says one of the biggest topics today is how to broaden research of companies in developing markets: “We are approached almost weekly by groups who would like to work on ratings in emerging markets because they see it as a useful way of getting companies interested.” In November 2007, Eiris partnered with the Johannesburg Stock Exchange to develop an enhanced SRI index, which Webster says could indicate where developing market research is headed: “The index includes criteria on black economic empowerment and HIV Aids, which are localised, important issues. Maybe corporate social responsibility in China won’t start with human rights, but this will gradually become part of it. It’s like Japan, where CSR has started with the country’s strong culture on environmental issues.”

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