CFDG Unlocks Socially Responsible Investment

9th February 2010

New guidance being released the Charity Finance Directors’ Group (CFDG) concludes that “socially responsible investment is legal and can be incorporated into sound models of financial return”.

The publication Unlocking Socially Responsible Investment provides comprehensive guidance on SRI, and was written with contributions from industry experts Newton Investment Managers, who sponsored the report, the EIRIS Foundation and Bates Wells & Braithwaite LLP.

The report sets out:

• the current state of SRI;

• the relevance of SRI to charities;

• the types of investment available;

• the legal environment;

• how to overcome perceived barriers; and,

• how to develop and implement an SRI policy.

The guidance includes case studies of the SRI experiences of varied charity investors as well as results from the recent CFDG/ EIRIS Foundation survey, which explored current trends in engagement with SRI by charities as well as the most commonly perceived barriers to ethical investment .

The publication finds:

Multiple benefits – SRI helps charities to fulfil their mission by treatment investment as another manifestation of their aims and values, and through direct shareholder activism. SRI can also play a vital part in maintaining charities’ reputations through minimising possible conflicts between investments and charitable objectives, and the potential for alienating of supporters, staff and beneficiaries.

Clear legal framework - the report finds that rules and guidance on SRI that are currently in place provide trustees with a broad legal framework in which to operate.

Improved financial returns - the rapid growth of the SRI market (in 2007 £8.9 billion was invested, by all sectors, in UK ethical funds) has led to the development of well-crafted SRI policies that can now meet charities’ financial aims, showing comparable or better returns than a policy that looks only at financial maximisation.

Diversity of approach - 60% of charities with investments over £1m surveyed currently hold an ethical investment policy. In the main this is carried out through the negative screening (87% of respondents). A quarter used positive screening (25%) and 19% and 3% respectively engage with companies on ethical issues directly or via their investment manager.

David Membrey, Acting Chief Executive of CFDG said, “We believe that SRI is a positive, forward-looking strategy for charity investment, and one that can reap significant mission-related, reputational and even financial benefits.”

Ruth Murphy, Director of Investment Management at Newton Investment Management Ltd., sponsors of the report, says, “We are very pleased to have contributed to this comprehensive report, which tackles the key issues raised in the CFDG/EIRIS Foundation survey in March 2009. The topics of SRI and ethics are very much in the minds of many charities and this report will, we hope, prove a valuable and practical aid to the debate on policy and its pragmatic implementation".

Stephen Hine, Head of Market Development at EIRIS said, “I welcome this guide as a timely reminder of the benefits for charities of SRI especially in terms of focussing investors attention on the importance of the long-term impact of their investments, both financially and also on the achievement of the charities overall purpose.”
Julian Blake, partner, Bates Wells & Braithwaite said, “this guide should assist charity trustees in the important appreciation of the real scope they have for making investment decisions by reference to socially responsible criteria properly linked to their charity's purposes.”

Unlocking Socially Responsible Investment will be launched at a morning seminar on 2nd March 2010. The seminar will open with thoughts from Rt Revd Lord Harries of Pentregarth (formerly Bishop of Oxford) and Lord Philips of Sudbury OBE (legal advisor to Richard Harries in the case Bishop of Oxford and others vs. the Church Commissioners of England). The audience will then hear the perspectives of the report’s authors and from the Charity Commission, on their revision of Investment of Charitable Funds (CC14).

Members wishing to attend can book a place here.

Journalists wishing to attend the launch should contact Kate Hand, at kate.hand@cfdg.org.uk, or on 020 7785 6419.

- Ends -


Notes to Editors:

The Charity Finance Directors' Group (www.cfdg.org.uk) was established in 1987. It is an umbrella group that specialises in helping charities to manage their finance-related functions. CFDG’s circa 1,600 plus members are responsible for the finances of charities with a wide variety of income levels. Between them our members manage circa £14 billion in charity income per year.

Newton Investment Management Ltd (www.newton.co.uk) manages over £42.1 billion* on behalf of charities, institutions and individuals. Charity investment services include a segregated portfolio management service and a balanced charity common investment fund, the Global Growth & Income Fund for Charities. More than half the charitable assets are governed by charity-specific SRI and ethical policies and the team provides bespoke screening and policy guidance to clients. * as at 31.12.09.

The EIRIS Foundation (www.eirisfoundation.org) is a charity that supports and encourages responsible and ethical investment. It promotes research into 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 objectives. Its wholly owned subsidiary, EIRIS, is a leading global provider of independent research into the environmental, social, and governance (ESG), and ethical performance of companies.

Bates Wells & Braithwaite London LLP (BWB) (www.bateswells.co.uk) is a full service commercial law firm, based in the City of London, serving a wide range of commercial, statutory, charity and social enterprise clients and their owners and managers. BWB is widely regarded as the leading charity, social enterprise and not-for-profit law firm in the country and is recognised as such by the leading guides to the legal profession, Chambers UK and the Legal 500.

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