Equities
Equity investment refers to the ownership of a share in a company. Your charity could adopt a positive screening, negative screening and/or engagement approach to equity investments. It is possible to invest directly in companies and through a pooled investment fund.
In this section:
What are equities?
Responsible Investment Issues
How Responsible Investment operates
Further information
What are equities?
Equities are commonly known as stocks and shares, and refer to the ownership of a share in a publicly quoted company. Owners share in the risk and rewards of the company’s performance.
Responsible Investment Issues
Equity investments have been the focus of most responsible investment activity. Research is available on the social, environmental, governance and ethical performance of most publicly quoted companies. Investors can use the research to make decisions on companies to avoid or support.
It is also possible to use the ownership rights that come with equity investments to engage with companies or vote on issues of concern.
How Responsible Investment operates
The Responsible Investment options for equities depend on whether your charity invests through pooled funds or through a segregated approach.
Segregated investments
It is possible to develop a bespoke policy by which the fund manager will screen equity investments (on both positive and negative criteria) in line with your charity’s policy. Fund managers also engage with companies and, therefore, when deciding on which fund manager to employ, you may wish to examine their engagement policies and records.
It is also possible to invest directly in companies. You may wish to use the services of a research provider – such as EIRIS or Ethical Screening – to determine which companies meet your ethical criteria. You should take appropriate advice before making investment decisions.
Pooled investments
There are several equity funds, including common investment funds and retail funds, which employ responsible investment criteria. The Database of funds and fund managers provides some examples.
Further information
Ethical Investment Research Services (EIRIS) Limited researches over 2,800 companies globally. Coverage spans 40 different areas including traditional "sins (alcohol, tobacco, pornography etc.), environmental performance, human rights and many other areas. EIRIS works with charities to translate their core mission into a meaningful, detailed policy to be used in the filtering of the investable universe. This enables charities to find out if companies are ‘acceptable’ according to their own specific ethical criteria. Further to this, charities can look at company reports and sector reports either as an investment tool or when assessing partnerships and donations.
The Charity Investment Ethics Database from Ethical Screening gives charities and not-for-profit organisations basic information on the ethical issues affecting the UK's top 350 companies. This free of charge service aims to increase awareness of ethical investment within the not-for-profit sector; and enable registered users to harmonise their investment policies and portfolios with their charitable aims and objectives.
