Charities increasingly adopting ethical investment policies, but concerns over financial returns remain

18th October 2012

Following research published by UK Sustainable Investment and Finance Association reporting that three in five adults with investments want charities to take a leadership role in responsible investment of assets, Charity Finance Group have released findings from a survey of its members showing that 51% of charities now have an ethical investment policy.


This figure, from the survey for National Ethical Investment Week, is an increase from 46% in a similar survey carried out in 2009. Over a quarter of those with an ethical investment policy (26%) are also now engaging directly or indirectly with the companies in which they invest, suggesting that charities are increasingly responding to public expectations of them to take a leadership role on investment stewardship issues, as reported by UKSIF this week. Reflecting the challenging financial climate, concerns about the possibility of ethical investment resulting in a lower financial return were the most important barrier to ethical investment, followed by a lack of staff resources.


CFG CEO, Caron Bradshaw said ‘the findings from our survey show that, although it is still a concern to some, charities are increasingly looking through the assumptions that ethical investment negatively impacts on the bottom line and responding to public expectations that they should invest responsibly. Ethical investment can deliver significant benefits to both the charity and wider society without negative impact on financial returns.  A growing number of charities are not only adopting ethical investment policies, but also positively engaging with the companies they invest in. We’d encourage charities of all sizes to consider developing an ethical investment policy and I’m pleased with the guide produced by UKSIF in association with CFG for National Ethical Investment Week, which, with other guidance produced by CFG, can really help with this.’


Other key findings show that:
• Avoiding conflict with the charity’s aims and activities is the most importantreason for charities seeking to adopt and retain an ethical investment policy
• 89% of respondents said the economic downturn had not influenced their charity's view of environmental, social and governance issues relating to investment
• 88% of respondents said trustees were an important driver of their decision to implement an EI policy, but Finance Directors were important in just 30% of respondent charities


Notes to editors:


1. CFG is the charity that champions best practice in finance management in the voluntary sector.  Our training and development programmes enable finance managers to give the essential leadership on finance strategy and management that their charities need.  With more than 2,000 members, managing over £21bn, we are uniquely placed to challenge regulation which threatens the effective use of charity funds. For more information, please see www.cfg.org.uk


2. National Ethical Investment Week (NEIW), the campaign to raise awareness of green and ethical investment, is coordinated by the UK Sustainable Investment and Finance Association. CCLA is the sponsor of the Week’s Churches and Charities activities. NEIW 2012 will be held 14-20 October. For more information, visit www.neiw.org.  


3. The survey was carried out with 102 CFG member charities. A full report of findings from CFG’s survey can be found on the CFG website.
                                                                 
4. CFG held a breakfast debate on ethical investment on Thursday 18th October as part of NEIW 2012.               

                                       
5. The 2009 survey, with 164 respondents, was carried out by CFG and EIRIS Foundation as part of the Unlocking Socially Responsible Investment report.     

                                          
6. For further information please contact douglas.hull@cfg.org.uk

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