|
Charities are sticking to their ESG investment principles despite pressure to relax policies in order to achieve higher returns, a new study* from Rathbones, one of the UK’s leading charity wealth managers, shows.
The survey of senior executives at charities with a collective £5 billion of equity investments found nearly nine out of 10 (86%) say it is important investments have strong ESG credentials and 89% believe the importance of ESG will increase over the next three years. That includes 22% who say ESG will become significantly more important when considering investments.
The ESG stance is being maintained despite 76% of charities reporting that they are coming under pressure to relax ESG policies in order to deliver higher returns needed to maintain services.
Kate Elliot, Head of Responsible Investment Centre of Excellence, Rathbones, said: “It is clear that charities are sticking to their guns on ESG investing despite growing talk about an ESG backlash or the need to compromise ESG principles in order to achieve higher returns.
“Charities are very much committed to delivering on their values, and ESG investing is central to that as demonstrated by their plans to toughen up exclusion lists and to work with investment advisers that can meet their ethical standards. It is not a regulatory box-ticking issue for charities but central to their mission and purpose, helping them align their investments with the causes and communities they exist to support”
Charities questioned are also planning to toughen up their investment exclusion policies with two out of three (67%) saying policies will become stricter over the next two years. Just 27% say exclusion policies will become looser.
Only around a quarter (26%) questioned said they are currently very concerned about their adviser's ability to meet ethical requirements compared with 59% who said the same in Rathbones research last year**.
More than four out of five (85%) say investment advisory firm’s ESG credentials are important in the selection process, and almost all (97%) say ESG credentials will become even more important in the next three years.
There are signs of change in how charities address ESG from the research with a growing focus on the social part over the next two years when selecting funds and investments. Around nine out of 10 (87%) say their charity’s focus on Social investments will increase over the period compared with 73% saying the same about Environmental and 79% about Governance.
The research found that nearly a third (31%) of charities had toughened up exclusion lists over the past two years with just 3% cutting back and 66% maintaining lists. Almost all (94%) believe they are very or quite effective at screening out investments.
Rathbones has been managing money for charities for more than 100 years and supports more than 3,000 organisations nationwide, with portfolios ranging from £10,000 to more than £100 million.
The Rathbones Charity Growth & Income Fund has been designed to meet the long-term investment objectives of many UK charities. It aims to deliver a total return - the combination of income and capital growth - in excess of inflation as measured by the UK Consumer Price Index (CPI)) +4% after fees, over any rolling 10-year period.
ENDS
