Charities with reserve funds available may implement an Investment Policy alongside their Reserves Policy. This would ordinarily be an ethical investment policy to ensure its investments do not conflict with its aims. Ordinarily, a charity's ethical investment policy precludes known direct or indirect investment in companies that generate revenues from alcohol, tobacco or armaments. Charities should now be looking towards sustainable investments which have a positive impact on the world and still produce a profit. Ethical Investment is also termed as: Socially Responsible Investing (SRI); Environmental, Social and Governance (ESG); Impact Investing; and Sustainable Investing.
This means most charities need to carefully review their existing or new investment portfolios and consider additional preclusions including where companies have negative impacts on the world including worker’s rights, slavery, climate change, the natural world or are involved in polluting, animal testing or intensive farming.
Always seek professional advice from your accountant and or financial advisor when considering investments.
Here’s an Investment Policy template I made earlier it’s free for you to download and you can review it and tailor it to your charity (coming soon)
Here’s the latest Gov guidance
Here’s the latest Charities Aid Foundation guidance on ethical investment
Here’s a useful Times article on ethical investing
and another from The Guardian
Choosing an appropriate ethical fund to invest will be unique to each charity but if a fund relies on in-house ESG research and produces impact assessments of portfolio holdings, this suggests that investing with a conscience is integrated into the fund’s strategy. Equally, they should share their entire portfolio not just the top holdings and be signed up to the United Nations Principles for Responsible Investment or the UK Stewardship Code 2020. These pointers will help you avoid funds just ticking an ESG box.
Here's an example of an ethical investment to give you an idea of the level of research, scoring, transparency and ESG compliance.
Jane Deamer ILM BA Hons Dip YCD
M: 07495 539611