(Bloomberg) -- A long-time Kingspan Plc shareholder reduced its stake on concerns about the Irish manufacturer’s insulation business raised by an inquiry into England’s deadliest fire in 75 years.
Liontrust Asset Management Plc lowered its sustainability rating of Kingspan last month, triggering the sale of some stock held by its funds, according to an emailed company statement. The London-based asset manager owned 1.2% of Kingspan at the end of last year after shrinking its holding to about 2.2 million shares from 2.6 million at the end of the second quarter, data compiled by Bloomberg show.
Kingspan’s shares fell as much as 4.6% in Dublin trading on Friday morning.
Kingspan last month acknowledged “unacceptable conduct” at its U.K. insulation business after revelations at the public investigation into the deaths of 72 people in the 2017 Grenfell Tower blaze in London. The company was unaware that its product was used on the tower until after the fire, Chief Executive Officer Gene Murtagh said in an email to staff after the inquiry unearthed messages between employees in which they joked about general product safety.
The Grenfell inquiry has “raised serious concerns about the culture and controls within the insulation business at Kingspan,” Liontrust said in the statement. The rating downgrade “means we view a company as higher risk and its weighting in our portfolios should be smaller.”
A spokesperson for Kingspan declined to comment on Liontrust’s statement.
Read more: Key Kingspan Executive Retires After Grenfell Revelations
Kingspan has long been a top pick for fund managers looking to buy into environmental stocks. Its appeal to green investors is simple: buildings are responsible for about 40% of the European Union’s greenhouse gas emissions from energy use, and insulation can help cut carbon emissions.
Liontrust said Kingspan’s statement last month on the inquiry showed the company “will learn from their mistakes and are taking appropriate actions to ensure that such conduct never happens again.” Still, the asset manager said it will reserve judgment until the inquiry concludes, and will maintain its stake as it engages with Kingspan’s management.
About 5% of the insulation boards sold for use in Grenfell Tower were from Kingspan, Murtagh also said in his email to staff.
(Updates with shares in 3rd paragraph.)
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