The ethical question
October 2009
Discussing socially responsible investment isn’t widely construed as part of the day job for charity consultants, a recent report reveals
Research into charity advisers’ current thinking on socially responsible investments (SRI) indicates that consultants could do more to help ensure charities invest in line with their mission.
Are charity consultants helping or hindering the development of SRI published by EIRIS Foundation Charity Project and the Charity Finance Directors Group (CFDG) sets out a number of recommendations for charity advisers; advising they could do more to:
- raise SRI issues with all charities;
- provide information and training to trustees;
- include environmental, social and governance (ESG) issues in standard reviews of investment managers;
- keep informed of latest developments; and
- communicate market gaps to fund managers.
The report revealed that 87 per cent of UK charities with an ethical investment policy were questioned by their financial advisor regarding incorporating ethical issues within their investments. However for those charities lacking an ethical investment policy, just 43 per cent of advisers broached the issue.
Advisers are less likely to ask charities about SRI if they don’t already have an ethical investment policy; 15 per cent of such organisations surveyed said their advisers were discouraging or very discouraging – compared to 4 per cent of charities with an ethical policy.
Key findings also showed that some advisers don’t see it as their role to ask charity investors about SRI, particularly if the organisation has broad aims and objectives. Advisers agree that consideration of social and environmental risks shouldn’t harm, and in fact could actually improve, returns in the long run, but a focus on short-term potential risks of under-performance and volatility is common.
Over 90 per cent of the general public believe that charities should invest ethically – in line with their reputation, and avoiding conflicts with their work and risks to their reputation.
'Many of the challenges raised by advisers could be easily overcome,’ said report author, Sam Collin. ‘The intermediary role of advisers means that they could be doing more to breakdown the perceived barriers, provide clear and up to date information to trustees and communicate gaps in unmet demand to service providers.'
The full report is downloadable at: http://www.charitysri.org/homearea/documents/charityadviserdiscussionpaper.pdf
Author: Claire Shropshall
Claire Shropshall is the editorial assistant for Charity Funding Report, Caritas, and Codicil magazines. Claire has a BA in English Literature and Philosophy from Birmingham University and a Postgraduate Certificate in Periodical Journalism from London College of Communication. She previously worked in Central America as a voluntary reporter for an English-language newspaper.
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