Translations

“Climate Change Fund”, VIRGIN Group’s green fund

4. Environment

Energy / Greenhouse Gases (GHG)

Sector Finance / Bank / Insurance

Year 2009

Country United Kingdom

Transmitter

Context

Richard Branson, CEO of English Virgin Group, is now famous for his commitment to the fight against climate change. Given the Stock Market crisis, he has decided to strenghten the finance department of its operations.

Virgin Money subsidiary was set up in 1995. It covers all the sectors of the financial industry: means of payment (credit cards), personal loans, mortgages, insurance policies, etc. In a survey that was carried out in 2007, 29% of English consumers (i.e. around 11 million people) prefer products or services from companies fighting against climate change.

Virgin Money launched a ‘green’ financial product in 2008 in order to meet that demand raised by environmental concerns. Its is called “Climate Change Fund” and invests in the companies that emit less greenhouse gases.

Objectives

- Make it possible for consumers to invest in big companies that have a minor ecological footprint without sacrificing their performance
- Make both the investors and the Earth’s future better

APPROACH

Virgin Money has gone into partnership with GLG Partners LP consulting firm, and with Trucost to get environmental data.

The Heads of “Climate Change Fund” consider that environmentally-friendly companies give a higher return on investment. Contrary to other green funds, that fund does not exclude any investment sector. The rule for the investment allocation will follow this pattern:

-          75% and more… : companies with a low environmental footprints,
-          …plus 15% at most…: companies that implement solutions to curb their environmental footprints,
-           …plus 10% at most: companies providing solutions to curb environmental footprints.

That management strategy is that of “green filter”. First, companies are selected according to their potential efficiency, and then the ecological footprint criterion is applied.

If consumers make a £500 deposit, they can invest up to £7,200, withdrawals accepted.

Investors are free to withdraw and there is no need for a notice. Capital gains are not taxable.

There is an annual management fee of 1.75%. A performance related fee is charged if the fund outperforms the benchmarks set. It can consist in comparing the fund’s performance with the fluctuation of the Bank of England’s rate.