New guide to SRI from EIRIS and CFDG
A new guide: Socially Responsible Investment – A practical Introduction for Charity Trustees was published in June to help the increasing number of trustees who are adopting or updating responsible investment strategies on behalf of their organisations.
Jointly published by the EIRIS Foundation and Charity Finance Directors' Group (CFDG), the free downloadable guide explains an investment approach that takes environmental, social, ethical and governance factors into consideration when making investment decisions.
It explains that the Charity Commission currently recognises three situations where an investment strategy can be governed by considerations other than solely the level of investment return.
These are:
- Investment in a particular type of business would conflict with the charity’s aims.
- An investment might hinder the charity’s work, either by alienating supporters or staff or by making potential beneficiaries unwillling to be helped because of the source of the charity’s money.
- Trustees can also accommodate the views of those who consider an investment to be inappropriate on moral grounds, even if an investment does not come into either of the previous two categories, provided that they are satisfied that this would not involve ‘a risk of significant financial detriment.’The Charity Commission is set to undertake a review of its investment guidelines (CC14) shortly.
The guide goes on to set out five steps to take SRI forward which are:
- Clarify the current situation – gather information, address current concerns and be in a position to suggest how to go forward.
- Get SRI on the agenda – engaging stakeholders to build agreement.
- Set aims – articulating what the charity is actually going to do about SRI and how, looking at the links to objects, strategy, investment approach and risk assessment.
- Develop or update your SRI policy. This enshrines the first three steps into a written policy, agreeing the approach (such as what to screen out, what to promote, the overall effect on portfolio balance), and making compliance checks.
- Implement policy. This is about actually making the SRI policy happen, such as using a fund manager with an active engagement process, or pooling funds in an ethically pooled fund with a low minimum required investment level.
Note that the Caritas SRI Round Table Discussion event held in July 2010 will be published as an eight-page supplement bound into the September 2010 issue.
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