The Co-operative Asset Management – the £19bn (€21.7bn) funds business which was prominent in the investor campaigns on tar sands at BP and Shell – faces being sold to financial conglomerate Royal London Group.
The Co-operative Financial Services said late last week that it was in talks with Royal London to sell its life insurance subsidiary, including the £15bn of assets in its Long Term Business Fund and the Co-operative Asset Management (TCAM) which manages the fund. The move comes as part of a review of operations following the merger with mortgage lender Britannia in 2009, which will see 670 job losses in its retail business.
As part of the deal, TCAM’s funds range – which feature low turnover, integration of ESG and exclusion policies – will also transfer across to Edinburgh-based Royal London, a Co-operative spokesman said. These include the £308m CIS Sustainable Leaders Trust and £80m CIS Sustainable World Trust managed by Mike Fox and the £157m CIS Sustainable Diversified Trust under Linda Desforges.
Mutually owned Royal London, which has a total of £42.2bn in assets under management, is parent of various finance firms including Scottish Life, Scottish Provident and asset manager Royal London Asset Management, which is a signatory to the UN-backed Principles for Responsible Investment.
London-based RLAM currently has two ethical funds. There is a £79m bond fund run by Eric Holt that was launched in 2007 with screening from sustainabilityresearcher EIRIS. And a UK ethical equity fund managed by Bradley Mitchell was launched in May this year. A RLAM spokesman declined to comment.
TCAM is one of the leading voices in ethical corporate governance. It launched its Toxic Fuels campaign in 2009, to highlight the environmental and financial risks of unconventional fossil fuels; it was co-filer of the BP and Shell resolutions in 2010. In all, it opposed 10% of management resolutions at annual general meetings last year.
It has had an Ethical Engagement Policy since 2005 and votes on all equities held, and discloses its entire UK and overseas voting record online.
“It does mark the end of a notable chapter,” said the Co-operative spokesman.
The operation has around 50 employees – including seven in the responsible investment team headed by Niall O’Shea. The Co-op has been in the news for its decision to suspend advertising in now-defunct News Corp. tabloid the News of the World in wake of the phone hacking scandal.
Despite having around £19bn in assets under management, just £1-2bn are external institutional client assets, the Co-operative spokesman said.
Last year TCAM teamed up with private equity giant Kohlberg Kravis Roberts to invest in companies that show leadership in environmental, social and governance (ESG) issues.
A £1bn commitment to renewable energy made earlier this year, made by the Co-op’s corporate banking arm, is unaffected by the announcement.