Do UK charities invest responsibly?: a survey of current practice

Do UK charities invest responsibly?: a survey of current practice

How many UK charities invest funds ethically?

This document reports on a survey of the major UK charities that asked about their ethical investment policy and practice. Both the UK government and charities commission have recently encouraged charities to follow the pensions sector in reporting on the ethics of their investments.

Key findings are:

  • 60% of top charities surveyed have no written ethical or socially responsible investment policy
  • most of these have not considered socially responsible investment issues to date, but a third of them are planning to do so in the next year
  • those with ethical or socially responsible investment policies overwhelmingly opt for negative screening policies. The most common reason for doing so is coherence with the charity’s purpose
  • far fewer use voting their shares, direct engagement with companies or positive screening
  • almost two thirds of those charities with written policies do not report to supporters or donors on their policies or implementation

The author discusses barriers to charities investing in ethical funds and states that key to these is the often incorrect assumption that ethical investments lead to lower returns. He outlines the measures charities might start to take according to their size and role.

Many charities face serious risks over the way they manage their investments. Many of them are likely to be caught unprepared by new guidance from the Charity Commission and legislation from the government. Growing interest in corporate responsibility and socially responsible investment in other fields is likely to widen the gap between expectations and practice, unless charities move to close it. [Author]