Cruelty Free Super


Introduction | Ethical Investment - global phenomenon | The Three Pillars | Cruelty Free Super | Media Room - Living Vegan Interview

INTRODUCTION

Whilst most people are familiar with the concept of cruelty free cosmetics and products, the majority of people are probably not yet aware that a similar concept exists with investing through Cruelty Free Money. Put simply, almost any financial product that you buy or invest in could be linked to the exploitation or mistreatment of animals, people and our planet. Cruelty Free Super was the first product launched in Australia by Ethical Money and is Australia’s first Superfund to be targeted at a specific ‘values group’. Cruelty Free Super is THE Superfund for all those who consider animal welfare issues to be an important ethical issue, alongside human rights and environmental issues.

ETHICAL INVESTMENT - THE GLOBAL PHENOMENON

Ethical Investment is a growing phenomenon across all investment markets around the world and Cruelty Free Money offers investors the opportunity to be part of this phenomenon.

Ethics are highly subjective and there are ethical investment options which can meet the needs of all investors, whatever their values. However, this has not always been the case; in the early days of ethical investment much emphasis was placed on avoiding the core ‘moral values’ issues such as armaments, alcohol, tobacco, human rights abuse etc. These values commonly evolved out of faith-based concerns and were, logically, reflections of the values of the religious groups who promoted them. In the UK the first ethical fund, Stewardship, was launched in 1984 and reflected the original Quaker values of the fund’s promoter, Friends provident.

The first example of Cruelty Free money arose in the UK in the early 1990s. Lee Coates, Director of financial planning firm Ethical Investors, observed that ethical funds at that time were almost exclusively focussed on ‘human’ and ‘moral’ issues, with some funds covering a narrow range of environmental issues as well.

THE ‘THREE PILLARS' OF ETHICAL INVESTMENT

Lee developed his “three pillar” approach to ethical investment, which he named Cruelty Free Money. The three pillars of Cruelty Free money are Animals – People – Planet. The critical component for a genuinely cruelty free investment strategy is the inclusion of criteria to exclude companies whose activities exploit animals. The “three pillars” carry equal importance and elevate the concept of cruelty free money beyond the more limited “two pillar” approach (people and the planet) adopted by the majority of ethical investment strategies.

Over a two year period Lee’s three-pillar approach was refined by working with animal welfare groups, until three of the then largest UK ethical fund providers adopted his ‘Cruelty Free’ investment strategy. All three investment companies simply amended their existing ethical values, extending them into a comprehensive set of criteria to ensure that animal exploitation in all forms were prioritised alongside the other values covered within the funds.

CRUELTY FREE SUPER - the perfect option for a holistic cruelty free lifestyle

Nowadays, the phrase 'a job for life' has been replaced with phrases such as 'flexible working' and 'variable career opportunities'. We are all moving between jobs, employers and even careers as we go through our working life, and at each change there may be yet another change in Super provider.

Having a Super fund that can move with you from employer to employer, job to job and is consistent with your own personal values is something that can be offered by Cruelty Free Super.

Rolling over your old Super accounts into Cruelty Free Super can help ensure your super money does not finance the exploitation of animals, people and our planet and it may save money too (many Superfunds have fixed weekly fees which means the more accounts you have the higher the fixed weekly fees).

To consolidate your Super into a single manageable account like Cruelty Free Super click visit the Join Here page of this site.

Once you have opened your Cruelty Free Super account, you can stay in the fund and take advantage of its portability as you change jobs over your working life.

Click here to be taken to the Cruelty Free Super site

INTERVIEW FOR LIVING VEGAN - 2012

In 2012 Living Vegan magazine ran an interview with Lee Coates, Director of Ethical Money Pty Ltd, to find out more about our unique Superfund and the motivations for launching the fund in Australia. Our thanks to Living Vegan magazine for showing such an interest in CFS and to helping us to spread the word about the link between values and money.

Can you tell us your 'going vegan' story, and why you decided to start the Australian Cruelty Free Superfund?

The history of Cruelty Free Super goes back 20 years to my days as an ethical financial planner in the UK. To meet the needs of my clients who were supporters of Animal Aid, BUAV, League Against Cruel Sports etc, I needed funds which had tight criteria on animal welfare issues but none existed. So, over a period of 6 months in 1992 I ‘worked on’ a number of existing ethical funds providers and quite quickly three of them went vegan’.

During a sabbatical in Australia in 2008 I noticed that the existing ethical investment options were just like those in the UK 20 years before; animal welfare was not really considered an ethical issue. It seemed a bit déjà vu and I couldn’t resist the chance to show to the financial community in Australia that animal welfare issues are just as important as human rights and the environment – everything is interlinked.

You are regarded as one of the most highly qualified financial advisors in the world. What are your qualifications, both in terms of specific educational qualifications and practical experience?

Recognition for financial planners is split between academic qualifications and a more holistic ISO standard. In the UK I am an Associate of the Chartered Insurance Institute and an Associate of the Institute of Financial planning. These titles are based on academic achievement. Above and beyond the academic, the International Standards Organisation has established a standard for financial planners – ISO 22222. In order to apply for this standard a financial planner must reach a high level of minimum academic achievement and then be subject to an annual audit where the adviser’s delivery of their financial planning advice is assessed. It is one thing to pass exams, it is quite another to be judged on what one does with the knowledge. What I find very interesting is that amongst all of the developed financial services markets around the world, the ISO 22222 has been adopted as the ultimate level by which to judge the professional standing of a financial planner. One of the very few countries which has chosen not to adopt the standard is Australia, and I find this quite baffling. I am not sure why the various professional bodies have not embraced the standard like everyone else. I am pleased to say that in the UK I am one of less than 100 financial planners who hold the ISO 22222 accreditation.

What was the return of the Australian Cruelty Free Superfund in its first year/s of operation and how did this compare to other Australian super funds? (If it was lower were there any specific reasons for this, e.g. start up costs, teething problems etc.?)

Return for CFS from 10/10/2010 to 16/06/2012 was positive 5.38%, versus the ASX 200 negative 13.0% (Gross)

Return of CFS from 1/7/2011 to 12/6/2012 was positive 3.02% versus the ASX 200 negative 11.61% (Gross)

When compared to other superannuation funds, we have statistics from 1st July 2011 to 30th April 2012:

Return for CFS 1/7/2011 to 30/4/2012: Net positive 4.45% versus gross ASX 200 negative 4.59%

A survey conducted by Morningstar indicates that the largest 50 funds returned positive 2.41% over the same period.

All the indicators show that the CFS portfolio has performed well when compared to the market, however in absolute terms all superannuation funds have performed poorly. And since the end of April investment markets have been very poor (CFS 1/7/2011 to 12/6/2012 positive gross 3.02% versus negative 11.61 from the ASX200).

The Australian website doesn’t include a history of returns as yet because it’s so new, however, we couldn’t find a history of returns on the UK website either, can you provide us with those? (Ideally both before and after fees returns, but you may not be able to do that because fees may vary).

In the UK I am a financial planner, not a fund provider, so have no involvement in the returns on the vegan funds. Whilst I went to the two companies with the idea for a cruelty free fund and helped them establish the funds, I am not involved in the management of funds. They are run by Henderson Investors and Kames Asset management and information on the two funds can be found at:

http://www.henderson.com/sites/henderson/uk_pi/FundCentre/ProductDetail.aspx?xfid=92http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=SEETHA&univ=U

How did it feel to be awarded an OBE for services to ethical business and finance? Did you manage to score the Queen as a client?

It was an absolutely wonderful feeling to open the envelope and read that I’d been selected to receive the OBE. In fact, I left the letter on my desk for a few days as I thought it was a tax bill so wasn’t rushing to look at the contents!! The OBE was presented to me by Princess Anne at Windsor Castle and it was a truly special day for my wife Sue and my UK business partner, Mike. And no, I didn’t manage to bag a Princess for a client!

What is the process used to select appropriate investments for Cruelty Free Super?

It is a two-stage process involving the Australian based Fund Managers, Grosvenor Pirie, and the UK based research company, Ethical Screening. The Fund Managers produce a list of shares which they might want to hold within the portfolio and this is sent to Ethical Screening. The companies which fail the Fund’s ethical screen are removed from the list and then the Fund Managers are free to buy any company from those which remain on the list. This arrangement is working really well as the two parties concentrate on what they do best.

Are you involved in any funds that are not ethically based or not vegan?

My entire focus in Australia is on delivering Cruelty Free investment options at the moment. I’d like to introduce some pure-play environmental and climate change funds at some point but that is a little way off at the moment. A highly focussed climate change fund would almost certainly be acceptable for a vegan investor so wouldn’t need additional in-depth screening.

Your Ethical Investors in the UK distributes 50% of its net profit to animal, people and environmental focused organisations but only 5% in Australia. Is this expected to grow as the fund grows?

It isn't really possible to compare the two businesses; in the UK Ethical Investors is a financial planning firm which generates income from fees and commissions. Historically commissions on financial products have been quite high and Ethical Investors has had no control over the level of commission it receives. It is this which forms the bulk of the pledge to distribute at least 50% of the firm’s profits to good causes. On the other hand, Cruelty Free Super is a product and as such the fees charged to customers is under our control. If we need to generate more money to give away to good causes, we simply need to increase the fees our members pay on their Superfund. As we have no plans to increase the fees (we actually plan to reduce them as the fund grows), there isn’t much scope for increasing the profit distribution. Given the choice, we think the fund's members would prefer not to have the fees go up so we can give more money away!

Are the funds distributed from Australian profits distributed specifically to Australian organisations? Who are/will they be distributed to?

Once Ethical Money, the fund’s promoter’ reaches profitability the 5% distribution will kick in. Our plan is to go to our members and ask them to choose the groups and then, on a proportional basis, we’ll distribute the money in accordance with the votes of the members. This group which receives the most votes gets the most money but not all of it. At least in this way each group who receives a vote will get something. Unless our members choose overseas groups to benefit, it will be 100% Australian beneficiaries.

What are your roles in each of Ethical Screening, Ethical Money Pty Ltd and Cruelty Free Super?

I've outlined the role of Ethical Screening earlier so this leaves Ethical Money. This is the company I formed in Australia in 2009 to bring the idea of cruelty free money from the UK. It is the company which promotes the Cruelty Free Superfund to the public. Ethical Money is responsible for setting the ethical criteria, promoting the fund, developing the social media side and, importantly, is the company which has pledged to pass 5% of its profits to good causes.

Cruelty Free Super isn’t a business, it is a product – Australia’s first Superfund to provide investors with an opportunity to save for their retirement without exploiting animals, people and our planet. I’ve delivered the product, it is now the time for Australia’s Vegans to stand up and let the financial community know that making money out of abusing animals just isn’t acceptable.

How does it sit with you that the fund managers don’t follow the ethical standards of the fund?

Firstly, I’d argue that all of our sub-contractors on the fund operate to the highest ethical standards. If they didn’t, we’d let them go. Are the Fund Mangers themselves Vegan? No, but if I could find some professionally qualified, experienced and authorised fund managers who were vegan then I’d be talking to them now about running Cruelty Free Super. The decision I had to make was; do I wait to launch a vegan Superfund until I can find only vegans to run it, or do I launch Australia’s first vegan Superfund to get animal exploitation issues into the forefront of peoples’ minds and try to stop financial companies profiting from abusing animals. It was more important to me to get something going to start the process of helping animals. Keeping the idea in a cupboard until it was absolutely perfect and sit back and see more animals exploited by Superfunds and investment companies just wasn’t an option for me.

Why is there a need to use to use these managers at all? Aren’t their actions dictated by your other companies anyway?

None of my businesses in the UK or Australia is authorised, or skilled, to manage money. This is a highly specialised function and I am sure that members of Cruelty Free Super feel better knowing that it isn’t me that’s making the investment decisions. I’ve never done it before and I am certainly not going to do it now. What I would like to see is the performance of Australia’s first Vegan fund to be at least on a par with non-ethical funds. This would prove that you don’t need to exploit animals, people or the planet to make money and will, I hope, convince more people to invest ethically. To get the best performance we need to use the best managers. One day, if the best managers are themselves vegan, then that’s great.

What’s coming next in Australia? Do we have enough of an ethical population here to make other products viable?

In the short term it is going to be more of the same. There are still far too many vegans in Australia with an existing Superfund who haven’t joined CFS yet. Some of these may be legally tied in to only using one Superfund, but there are others who say they are leading a vegan lifestyle but leave their money in funds with no ethical criteria and add more money every month and think its fine. So, rather than taking my eye off the ball and branching out in to new areas, I want to concentrate on getting CFS in front of more people and to see more people voting with their feet and leaving the current system of profit from exploitation. I am also working on ideas for vegan-friendly banking and saving. More of this another time.


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