Real Charity: What does your charities portfolio need when it comes to Ethical Screening? – Looking beyond the headlines.
Despite a growing range, the nature of restrictions and environmental, social and corporate governance ESG considerations, there is actually no formal requirement, in the Charity Commission guidance CC14, to have any restrictions at all. However, this should not mean your portfolio should be invested with no regard for corporate behaviour.
As we know, charities need to review their investment policy regularly and it is at this stage they have the opportunity to consider whether this should include an ethical requirement. In my experience, this can begin an interesting debate.
Starting with your investment policy, it is important to ensure that any ethical restrictions connect with your underlying aims and that connection should be demonstrated in your investment policy. We cannot simply decide not to invest because of fashion or political pressure. We need to demonstrate our reasons align with our mission and how it is achieved.
Consider your investment universe and return objectives
Restrictions could reduce the range of investments available and may have an impact on returns. Moreover, each board of trustees will need to consider what level of materiality matters to them. For example, does a prohibition on investing in tobacco mean not investing in those who retail it?
Whatever the final decision, investment managers should be taking issues such as governance, sustainability and attitude to corporate responsibility into account in and therefore our portfolios should reflect a concern over these issues.
What is your experience?
We would love to hear from you about how you and your charity board are tackling the complexity of ESG.
Senior Investment Director
020 3327 5400
Disclaimer & Important information:
If you are in any doubt whether any of the investments contained in this communication are suitable, you should speak to your Investment Director, or take appropriate advice from a professional adviser, such as an accountant, lawyer or Financial Adviser authorised and regulated by the Financial Conduct Authority.
- The value of investments and the income from them can fall as well as rise. An investor may not get back the amount of money that he/she invests. Past performance is not a guide to future performance.
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- Investors should consult their professional advisers on the possible tax and other consequences of their holding any of the investments contained in this publication.
©2018 Psigma Investment Management. This communication has been approved and issued by Psigma Investment Management. Psigma Investment Management is a trading name of Psigma Investment Management Limited. Authorised and regulated by the Financial Conduct Authority. Registered in England and Wales No. 5374633. FCA Registration No. 478840. Registered office: 11 Strand, London WC2N 5HR. A Punter Southall Group Company.