Ethical Hub : Ethical Reviews - Ethical Investment Review June 2023


Epworth recognises the ongoing concerns surrounding the banking sector. From local branch closures and investment in fossil fuels, to activities with nations in violation of international law, the sector is not without its problems. We also recognise, however, the absolute importance of participating in the sector as individuals, institutions and investors, and banks’ essential role in fostering global markets. Plainly, the World needs banks but it also needs banks to be better.

Working alongside stakeholders and experts, Epworth has published a sector specific policy on banks that seeks to better appraise their performance, hold them to account where necessary and improve their practices through company engagement. Previously, banking activities have been covered in other policy areas – climate change, human rights, etc. Epworth believes that a specific policy on banks is necessary to make transparent our position and proposed activity with the sector. In recognising the essentiality of banking and that disinvestment from the sector is not a viable economic option, the policy also sets out clear expectations of banks to provide a firm basis for review, challenge and action.

Details of this policy can be found on our website at Banking Policy Statement.

Ten Entertainment

Epworth engaged with a conviction stock, Ten Entertainment on waste targets. Ten Entertainment is a listed bowling company with food facilities too. Epworth met with the company and thanked the management for their response. We are pleased to report that the engagement on the topic expedited the company’s focus on setting such targets. All packaging is recyclable and Ten Entertainment is trialling customer segmentation of waste.


In 2019. we corresponded with Unilever regarding conditions of employment on Assam tea estates and again earlier this year after a troubling report of workers conditions. Epworth is now beginning an engagement project with the Methodist Church Sri Lanka to address concerns over community rights and sanitation in the Unilever-owned Sri Lankan tea estates.


This quarter, members of Epworth’s fund management team were able to meet with IntegraFin senior management. IntegraFin is an investment management platform provider based in the UK, and an investee company of Epworth.

One area of concern we have regarding the company’s approach to sustainability reporting is the lack of in-house expertise. The CEO was timid about seeking to recruit dedicated individuals to work on improving the sustainability reporting by the business. Instead, he noted that an existing employee, who’s background was in risk (including environmental risks) in the life insurance business at IntegraFin, was now leading the work for the business to developed its TCFD publishing around its carbon data and target setting.

We also noted that the group is not a Living Wage accredited employer. The CEO believed UK staff under one of its subsidiaries are London Living wage accredited, and disclosed that the business is working to get the accreditation at group level.

We also asked what IntegraFin is doing to help promote women & minorities in this famously male dominated sector, noting that the company reports its gender balance across its various business areas and does not appear to be a laggard. We agreed that quotas were not the way to go, but the CEO said the company was working hard to develop junior female staff so that they were in a stronger position to compete for senior roles. IntegraFin has signed up to both the 10k Black Interns and Women in Finance initiatives. We asked about how the company eliminates biases from its recruitment process – the company has not partnered with an external body in this area to date, but does take steps internally eliminate unconscious biases from recruitment as much as possible.


The Epworth Multi-Asset Fund now invests 2% of its portfolio in the SDCL Energy Infrastructure Trust, providing important capital for the clean energy transition.

Two-thirds of the world’s primary energy is lost before it reaches the consumer, through inefficiency in the conversion, transmission and distribution of energy. Lack of efficiency is therefore a major barrier to optimising energy consumption globally and transitioning to a carbon neutral future. SDCL Energy Efficiency Income Trust (SEIT) is the largest and longest running of the three listed investment companies that offer pure play exposure to energy efficiency infrastructure project investment, providing long-term efficiency solutions to commercial, industrial and public sector users in a way that aims to generate at least the same economic output from less energy. The model of investment offers the triple benefit of reducing energy waste (particularly important at a time of global shortage), cutting greenhouse gases and saving economics costs – a fundamental solution to two of the biggest crisis of this generation; the cost of living, and the climate. The chart below from Berenberg illustrates where energy transmission loss typically occurs (2019 data), showing how little makes it through to the consumer:

Global Energy Wasted

SEIT launched at the end of 2018 as the first dedicated listed energy efficiency fund, but was considered too small, unproven and illiquid to add as a holding when Epworth’s Multi-Asset Fund launched in 2019. However, with a market cap now over £1bn following a series of successful capital raisings that have seen it recently promoted into the FTSE 250, this barrier to investment no longer appears to hold. The portfolio assets now span the UK, Europe, North America and some parts of Asia, with the trust’s HQ in London.

The case for SEIT being a positive ethical investment is pretty obvious and comprehensive given its focus on improving energy efficiency, arguably as great as any potential investment available to Epworth. Energy efficiency represents more than 40% of the emissions abatement needed by 2040, according to the IEA Sustainable Development scenario, requiring a huge increase in both private and public investment. SEIT’s portfolio already generates more than 2.5m MWh of low carbon energy each year, with this capacity growing rapidly as SEIT adds new investments. Its energy efficient solutions have saved over 1m tCO2 emissions to date.

SEIT reports in line with TCFD, is a PRI signatory and also a member of the Glasgow Financial Alliance for Net Zero, the Green Finance Institute, the net zero asset managers initiative and the UK Green Building Council. It has also been awarded the LSE’s Green Economy Mark. SDCL was awarded Environmental Finance’s Boutique investment manager of the year in 2021. It has further progress to make on its ESG disclosures & data gathering, but has set out plans for doing this – its still a relatively small vehicle with a short listing history, so naturally has some disclosure catch-up to make. This includes further work on SEIT’s own net zero strategy, its responsible investment policy and IPCC scenario analysis.

ESG due diligence makes up a key part of the consideration of each potential investment. SEIT provides the graphic on the next page, that shows how its portfolio covers an impressive 12 of the 17 SDGs. This is a further illustration of the strong sustainability story the trust has to tell.

Sustainability Story