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L'înformâtion et les sèrvices publyis pouor I'Île dé Jèrri

Information in relation to a report on States Investment Strategies (FOI)

Information in relation to a report on States Investment Strategies (FOI)

Produced by the Freedom of Information office
Authored by States of Jersey and published on 28 September 2015.
Prepared internally, no external costs.



For each fund identified in report R.1532014 (States Investment Strategies) please identify to the nearest 1 percent the proportion of that fund that is invested in fossil fuel and hydrocarbon extraction and production, the proportion invested in nuclear energy production, and the proportion invested in other renewable energy production.


Please identify what specific and measurable criteria were used by the States Investment Adviser in performing their review into Ethical Investments for the States Funds carried out in January 2011. When and to whom was this report delivered, when was it published to States members, and why does it seem not to be available on the reports section of the States web site

Reports on States Assembly website


How frequently and by whom are the ethical criteria and the review of the investments against those criteria carried out? When is the next one planned?



Direct equity positions for all funds excluding PECRS are held via the States Pooling arrangement, the Common Investment Fund (‘CIF’). Therefore, only the Common Investment Fund has direct holdings. 

Each fund only holds ‘units’ in the CIF pools. An understanding of the exposure of the CIF will therefore give a better indication of the combined exposure of the funds in question. 

Within the CIF, we can clearly identify direct holdings in the energy sector. However we cannot segregate the proportion of the portfolio invested in fossil fuel extraction / production, nuclear energy production or renewable energy production. 

Energy companies are often involved in multiple sectors, for example BP, seen as a traditional oil extractor / producer, is also a significant investor in biofuels and wind farms.

We do not hold the information required to segregate our shareholding between the areas required and it would be a large logistical exercise requiring review of underlying accounts to achieve this. 

Currently, we hold in excess of 150 direct positions in the energy sector worldwide. The value of these direct holdings is approximately £73.7m. 

Further to this, we also hold indirect positions in energy companies through pooled investment vehicles. However, we do not record line by line positons which are maintained by the investment managers.

PECRS has two direct holdings in energy companies that make up 0.3% of the fund. 

As with the CIF, we do not hold the information required to segregate our shareholding between the areas requested.


The paper issued by the States Investment Advisor and referred to in the Investment Strategy was issued to the Treasury Advisory Panel (TAP), and was not circulated to States Members. 

The Treasury Advisory Panel provides advice on investment manners to the Treasurer and Minister for Treasury and Resources. 

The report, as with many reports commissioned in relation to our investments, cannot be reproduced, distributed or communicated to anyone other than the addressee of the report and therefore cannot be shared.

Although the report cannot be shared, I can summarise the content.

The report sought clarification of the UK government’s position with regard to encompassing ethical views in investment decision making.  

The report indicates that the States have historically acted as if they are trustees, holding assets on behalf of the beneficiaries of the relevant funds, which in most cases would be on behalf of some or all the Jersey population. 

They have therefore broadly adopted the same principles for investment as would a trustee of pension assets or trust assets, although the type of investment strategy would vary according to the specific purpose of each fund. 

The report then covers the UK case, Cowan versus Scargill, which has formed the basis of investment principles for many public and private institutions in various countries including the UK, Canada and Australia. 

The Cowan versus Scargill case concerned the Mineworkers Pension Scheme, where some trustees did not wish to invest in oil shares as this was felt to be a competing industry to coal.

The judge ruled against Scargill. Their findings were that those in trustee positions must act in the best interests of the beneficiaries rather than following their own moral views.   

An extract of the judgement is as follows:

"…the starting point is the duty of trustees to exercise their powers in the best interests of the present and future beneficiaries of the trust, holding the scales impartially between different classes of beneficiaries. This duty of the trustees towards their beneficiaries is paramount… When the purpose of the trust is to provide financial benefits for the beneficiaries, as is usually the case, the best interests of the beneficiaries are normally their best financial interests… the power [of investment] must be exercised so as to yield the best return for the beneficiaries, judged in relation to the risks of the investments in question and the prospects of the yield of income and capital appreciation both have to be considered in judging the return from the investment.” 

In addition, “trustees must put on one side their own personal interests and views … trustees must not refrain from making … investments by reason of the views that they hold”.

However, the report noted that the case took place in the early 1980s before social, ethical and environmental issues were as strong as today. 

It emphasises the importance of detaching personal views from those of the interests of the beneficiaries.  

It is difficult to know how a judge today would incorporate the social, ethical and environmental issues, but it is possible that those supervising trust assets would need to be careful if the financial return was significantly impaired by a very strong stance on the social, ethical and environmental front.  

However, in many cases, it will be difficult for companies to prosper in many countries unless they pay particular regard to the environmental consequences of their actions, and to the way in which they treat all types of stakeholder in their businesses. 

Therefore in many ways, such considerations are already ingrained into investment management decision making.

The report concludes that since social, ethical and environmental issues can have an important impact on the longer term returns available from any investment, it is appropriate for such considerations to be taken into account in any assessment of the value of any investment. 

It concluded that in making investment decisions within the overall guidance given by the minister and published by the States, decisions on individual securities, including the impact of social ethical and environmental issues, should and will be taken by professional investment managers.


The criteria applied to investments are delegated to our investment managers. 

They are invited to present to the TAP periodically where their investment approach is reviewed. 

Their performance is reviewed quarterly by the TAP on a formal basis and informally on an ongoing basis by Treasury officials. 

Therefore, there are no formal dates / times for the reviews to be carried out and there is no planned date for the review of the criteria themselves. 

Although we do not directly intervene in the activities of our managers, we implement our ethical framework through requiring CIF managers to follow the Institutional Shareholders’ Committee’s Statement of Principles (ISCSP) in respect of the corporate governance of companies in which shares are owned. 

The framework requires managers to discharge the States voting rights and, when appropriate, engage with company management whilst having reasonable regard, where relevant, to the ethically positive and negative contributions.

The principles act as guidance to investment decisions and are not binding.

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