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SRI Policy

When it comes to our own funds, we apply an exclusion policy consistent with the views of a large proportion of our charity customers. We do not invest in companies whose main business is the manufacture or support of gambling, tobacco or armaments. This policy also applies to bonds issued by companies in these sectors. Before making an investment in a property we make sure that it is subject to an appropriate environmental risk report.

Guidance for charities on adopting an SRI policy

The Charity Commission for England and Wales’s guidance for charity investment (CC14) covers SRI. It says that a charity can adopt any SRI policy that is in keeping with its aims and objectives, keeping in mind the fundamental principle of furthering the purpose of the charity. An SRI policy may involve looking for companies which demonstrate best practice in areas like environmental protection, employment and human rights, or for companies whose businesses contribute directly to a cleaner environment or healthier society. Or it may involve negative screening, to avoid investments in a particular business or sector. Many ethical investors and ethical investment funds adopt a combination of these positive and negative criteria.

In terms of setting an investment policy that is governed by considerations other than achieving maximum return from a set of prudently selected investments:

• A charity may to choose to not invest in a business where there is a practical conflict with its aims and activities.

• A charity can avoid investments which might hamper its work, either by making potential beneficiaries unwilling to be helped because of the source of the charity’s money, or by alienating supporters.

• Even if an investment does not come into either of the two previous categories, trustees can accommodate the views of those who consider it to be inappropriate on moral grounds, provided that they are satisfied that this would not involve ‘a risk of significant financial detriment’ In may cases, trustees may be able to conclude, after taking advice where appropriate, that a particular ethical policy is likely to perform as well as an unrestricted policy. But trustees are not free to use their investment powers to make moral statements at the expense of their charity.

Trustees are unlikely to be criticised for adopting a particular policy if they have considered the correct issues, taken appropriate advice and reached a rational result.

The Charity Commission encourages charities with an income of over £100,000 p.a. to disclose the extent to which social, environmental or ethical considerations are taken into account where material investments are held. It is seen as good practice to include such information in a charity’s annual report.