Ethical league names and shames

A FUND manager has made a pioneering move to name and shame the UK‘s worst companies and praise the best in an ethical league table. Investors will not be surprised to find tobacco companies such as Imperial Tobacco and Gallaher propping up the rest while drugs giants AstraZeneca and GlaxoSmithKline topped the league, despite criticism of Glaxo's reluctance to lower the price of HIV treatments for poor African countries.

Morley Fund Management, the ethically-focused investment house owned by CGNU, is believed to be the first manager to reveal its views on companies. Companies were graded from A to E on how well the nature of their businesses solve environmental and social problems. So a company involved with renewable energy or providing healthcare was graded A or B while an arms maker or oil producer might be ranked D or E.

A second grade was based on management‘s vision of sustainable development and how hard they push their ethical stance. Firms are ranked one to five. This grade will arguably have more sway on directors because although it is difficult to change the nature of a business it is possible to adopt more ethically sound policies.

Morley, which runs £150m-worth of funds, will not invest in companies ranked lower than C3 - nearly half of the companies in the FTSE 100. Some sectors, such as tobacco, oil and defence are ruled out by the perceived unethical nature of their business. But others operating in less questionable industries failed to make the grade such as HSBC and Standard Chartered banks (D3), hotels group Hilton (D4) and manufacturer Associated British Foods (D4).

The banks' low rankings were due to the impact of its lending while Hilton's gambling arm, Ladbrokes, reduced its score. Associated British Foods was marked down for producing products that 'are not a major part of a healthy diet', such as sugar and treacle flavourings, and for 'no real vision' in promoting sustainability.

The drugs companies' high ratings were thanks to their research to find new treatments and their willingness to 'engage' over issues, including cutting the price of HIV drugs in Africa.

No management made the '1' grade but telecoms group BT, Abbey National bank and gas company BG Group were among those to achieve B2 status.

The full table will be published at www.morleyfm.com .