31 Mar 2011, Clare Dickinson, Structured Products
Société Générale (SG) has listed an exchange-traded note (ETN) on the London Stock Exchange which gives investors access to the performance of socially responsible companies, while supporting a charity.
The SRI (socially responsible investing) ETN donates its annual 0.5% management fees to the Teenage Cancer Trust, which is SG's chosen UK charity of the year.
The ETN tracks a basket of 25 stocks identified by the bank's research team as providing performance and meeting socially responsible criteria.
"It's clearly a mix between hold/buy recommendations and the ESG [environmental, social and corporate governance] factors. When I saw the study I thought it was a good idea so I took this opportunity to create an ETN which tracks the performance of the basket and it gives all the management fees to charity," says Alexandre Houpert, London-based head of exchange-traded products for UK and Northern Europe at SG.
"The researchers wanted a selection which is socially responsible but which could perform well as well. Because a company is considered as SRI doesn't mean that they will generate a good performance in the stock market, sometimes it is quite the opposite."
Houpert says the bank is seeing growing demand for socially responsible investments from its clients, he notes that the United Nations Principles for Responsible Investments now has more than 850 signatories. These signatories are all institutions but Houpert says there is also retail interest in SRI, which is particularly strong in the UK.
SocGen's launch of a product which gives money to charity follows the recent Deutsche Bank listing of an ETF which donates fees to charity and Houpert says this may be a growing trend. "It is a great opportunity for us to give a contribution so potentially some more competitors will follow that trend... doing products which give good investment solutions and address some needs."
Houpert says the ETN is the first in a planned series of SRI products from the bank.