How convenient it would be if we could find something out of a package — a computer programme, presumably — to do our conscience’s work for us. Then we could switch off and stop worrying. Happily, in the world of investment, this need has been met, with the invention of ethical funds, armed with ethical codebooks. These are the investors’ equivalent of buying bubble baths from the Body Shop — a tepid glow of self-satisfaction comes with them. The Financial Times even has an ethical investment index, smugly entitled FTSE4Good. Along the way, ethics have been codified and redefined to fit the package. Now investors in Framlington’s Health Fund find themselves called to a meeting and asked to approve a change in their fund’s objective and purpose. These now include an innocuous-looking sentence, committing the fund to invest subject to ethical guidelines. The managers want to cross this sentence out. It is not that they plan to go over from virtue to vice. They mean to go on investing, as they always have, in companies which address medical needs not now met, or in other ways make life better for patients. You might have thought, as they did when they set out, that this qualified as ethical investment — but since then the term has been hijacked and is defined by exception. On these terms, an ethical company is one that will not (for instance) sell armaments or run casinos. The Health Fund will not invest in such businesses, either, but its managers do not want to pick stocks by what they call a process of negative screening. That sentence on guidelines now makes them uncomfortable, to a point where they want to do something about it and need their investors’ support.
‘We wanted to ensure that the fund managers were able to focus their energies on managing the fund,’ says Antony Milford, who runs it, ‘without having to worry about meeting ethical guidelines. We are stressing that the investment approach of looking for companies that are solving significant current medical needs will remain firmly in place.’ He will have my vote (I declare an interest) on Monday week at the meeting, when he will have to convince my fellow investors that they would be better off without ethical guidelines, in good conscience. He might try to release ethics from the hijackers’ grip, and explain that no set programme can excuse us from our duties of intellectual and moral judgment, however convenient that might be.
Bonus, melior, optimus
Sandy Crombie will get himself turfed out of the chief executives’ club. Fancy handing his bonus back — all £500,000 of it — because the results at Standard Life have been haud bona, or, translated from Latin to English, no good. What has that got to do with it? Any modern chief exec has a comparative clause in his contract which will let the remuneration committee authorise the cheque. Abbey National kept paying bonuses when it was deep in the red, doubtless persuading itself that things could have been even worse. I advocate executive maluses, or mali. These, in bad years, would make the chief exec contribute to the company, which could obviously use the money — a genuine incentive to perform, as Mr Crombie and I would agree.
Make it smaller
The boondoggle season has opened early, with a vacancy at the World Bank, where James Wolfensohn will not, after all, seek a third term in office. An unwritten rule lays down that candidates should be American. Born in Australia, Mr Wolfensohn changed nationality at the right moment, leaving this persuasive dealmaker with only one strike against him — he had no experience of running a large organisation. The obvious remedy, I thought, presented itself: make it smaller. Alas, he missed his chance. The World Bank is still its sprawling, self-perpetuating self, spread over much of Washington. I once tried to persuade Sir Brian Pitman, in his heyday at Lloyds Bank, to bid for it. No one was more skilled at saving costs by economising on head offices. Now some nominee of the United States Treasury will have the chance to ask what the World Bank is for, these days — it used to stand for plans and dams, but both are out of fashion — and what it can usefully do that the markets cannot do for it. Better still if this were not, as it too often has been, a retirement job. I entertain no great hopes, though. For too many people, this is too good a boondoggle to spoil.
Sobering news for my readers on their travels. Our assault on the heights of the two-dollar martini could not, in the event, carry us all the way to the summit, and we may need to suck on an olive and pause for regrouping. As for the ten-franc kir, that prospect, too, has receded. The French franc maintains a phantasmal and posthumous existence under cover of the euro, and its exchange rate can still be discerned. From 9.30 to the pound it soared in the spring and summer to brush up against double figures, but has now gone skidding back to where it started, or worse. Some attribute this to fading hopes of higher interest rates for sterling, now that consumer credit has come off the boil and nobody seems to want a mortgage. Drink up while stocks last.
Carthage by rail
My railway correspondent, I.K. Gricer, has been wintering in Carthage, which, he says, has much to teach us about railways. Do the Carthaginian trains, as ours do, give themselves two days off at this time of the year and shut down? Not a bit of it. The excellent TGM service continues to run at 20-minute intervals, day in, day out, from Carthage Hamilcar via Carthage Hannibal to Carthage Salammbo — station names worthy to rank with Hull Paragon and Edinburgh Waverley. My correspondent urges TGM to follow the Dutch and French railways in bidding for a franchise here. Our railways need to take the point about bank holidays, which is that neither banks nor trains need holidays. People do, but that is not the same thing.