CIFs called to pull their socks up
The EIRIS Foundation, which researches the social and ethical aspects of companies and provides other charities...
...with information and advice to enable them to choose investments which do not conflict with their work, has published a new guide for trustees: Responsible investment by charities, the role of pooled funds, which is downloadable from their website.
The document reviews the investment approach of 44 UK charity investment funds (CIFs) in order to help trustees understand how they can integrate environmental, social and ethical concerns into their investments. It recommends that all charity investors consider how their fund manager integrates environmental, social and governance risks and opportunities into their investment decisions. Key findings included:
- Responsible investment approaches of funds are still centred around negative screening – 27 funds screen out negative investments whereas only five screen in positive investments such as social enterprise organisations or clean-tech firms.
- Almost half of charity pooled funds apply no responsible investment criteria whatsoever. Around half of CIFs that do, go no further than to screen out tobacco.
- Funds with responsible investment criteria tend to be faith based and focus mainly on 'sin stocks' such as alcohol, tobacco and gambling.
- Key issues, including climate change, are only addressed by a handful of funds – for example by offering opportunities to invest in renewable energy companies or rewarding good disclosure practices.
- Few of the fund managers included in the survey provided details of a clear policy on engagement, voting and integration – potentially leaving charity investors open to financially material risks as well as reduced opportunities to make an impact.
www.eiris.org/files/research%20publications/commoninvestmentfunds09.pdf
Author: Clarissa Dann
Clarissa Dann was the editor of Caritas as well as an HR and management online service,he People Bulletin until July 2011.
She is now the editor of the specialist trade finance magazine, Trade and Forfaiting Review which can be viewed at www.tfreview.com but does write on charity finance and investment from time to time.
Clarissa has a background in legal and professional publishing, as well as business journalism and holds an MBA from
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