At Moneybox, our mission is to help you save and invest for your future. We understand that when it comes to investing, ethical and sustainable factors are increasingly important for our world today and into the future. That’s why we’ve partnered with Old Mutual to introduce a Socially Responsible (SR) fund that uses environmental, social and governance (ESG) scoring.

What is SR Investing?

SR investing is any investing strategy in which values— be they social, moral, environmental — are applied to portfolios and investment strategies. This can be done through the assessment and scoring of companies based on their ESG impact.

ESG stands for Environmental, Social and Governance.

The E- Environmental

The environmental criteria measure a company’s impact on the environment, such as energy efficiency and its emissions and waste.

The S- Social

The social criteria track various performance measures ranging from a company’s policies and record on human rights, right through to responsible employment practices.

The G- Governance

The governance criteria assess and measure how the company is run; from internal controls to leadership, as well as executive pay and shareholder rights.

Why have we introduced a Socially Responsible fund?

Over the past few years, we’ve learned how important socially responsible investing is to the Moneybox community. Young people, in particular, want to be able to have more of a say in where their money goes, what their savings invest in, and the type of future this builds for them. Having the option of a socially responsible fund, you can choose to invest in a way that’s more aligned with your values and support companies with better environmental, social and governance practices around the world, ranging from climate change to workers’ rights.


How does this Socially Responsible fund work? 

Moneybox has partnered with Old Mutual to offer customers the Old Mutual World ESG Index fund, exclusively available to Moneybox in the UK. The Old Mutual World ESG Index Fund tracks the MSCI World ESG Leaders Index and holds shares in global companies which are selected based on MSCI’s leading ESG approach.


How does the fund select for better ESG companies?

Here comes the technical part for those who want to understand what’s really going on under the hood of their SR investments.

Step 1: MSCI start with their World Index and eliminate companies with a low Controversy Score, which identifies companies involved in very serious controversies involving the environmental, social, or governance impact of their operations and/or products and services. Controversy Score falls on a 0-10 scale, with “0” being the most severe controversy. MSCI also exclude companies that are involved in controversial business activities including alcohol, gambling, tobacco, nuclear power, conventional weapons and nuclear weapons.

Step 2: MSCI then assesses and scores the remaining companies within the World Index based on their ESG risks and opportunities relative to their industry peers. The three pillars of environmental, social and governance can be broken down into 10 themes, shown below. The assessment factors include criteria such as how companies respond to climate change, treat their workers and manage their supply chains.

Company scores are adjusted for each industry and then mapped to a letter rating, ranging from ‘AAA’ to ‘CCC’.

ESG Pillars and Themes

Environmental themes:

  • Climate Change
  • Natural Resources
  • Pollution & Waste
  • Environmental Opportunities

Social themes:

  • Human Capital
  • Product Liability
  • Stakeholder Opposition
  • Social Opportunities

Governance themes:

  • Corporate Governance
  • Corporate Behaviour

Step 3: After the companies are ranked on their ESG rating, the top scoring companies (representing 50% cumulative market capitalisation from the MSCI World Index) in each industry and geographical region are selected for the MSCI ESG World Leaders Index.

Step 4: As the Old Mutual World ESG Index fund tracks the MSCI index, your money is then invested into these more socially responsible companies recognised for their high ESG score.  


Company inclusions & exclusions within the fund

Here are examples of two companies currently included in the index and two companies that are excluded.

As at April 2019

Sector – Energy

Included – Total SA

Reason – To establish its position as a low carbon utility, for the past two years Total SA has continued to invest in solar and battery storage in an effort to lower carbon intensity across operations

Excluded Royal Dutch Shell PLC

ReasonRoyal Dutch Shell and Eni S.p.A. continues to face allegations of corruption and money laundering related to its acquisition of oil prospecting license (OPL) 245 in Nigeria.

Sector – Automobiles

Included – Bayerische Motoren Werke (BMW)

Reason – BMW’s strong R&D investments strengthens its position in the premium electric vehicles markets, as such sales of electric/hybrid vehicles from 2016 to 2017 grew by 66%.

Excluded Volkswagen AG

ReasonTo date, VW has been associated with a high-profile scandal in which the company admitted to using an emissions testing ‘defeat device’ in diesel vehicles allowing emissions of up to 40 times more than the approved levels.


How often does the fund’s ESG scoring change?

The MSCI ESG World Leaders Index is reviewed quarterly. However, if a company’s ESG score drops significantly due to a certain event or its controversy score falls below a certain threshold, they will be removed from the Index immediately.

The Old Mutual ESG World Leaders Index is a passive product that tracks the MSCI index and therefore follows the same methodology.