Social, environmental and ethical issues
A wide range of social, environmental and ethical issues can be incorporated into a charity’s investments.
The issues that a charity considers will depend upon its values and activities. This decision may also be influenced by the charity’s areas of expertise and the views of donors, supporters or staff. The legal issues page explains why it is important for charities to carefully consider which issues are most relevant and appropriate.
This page provides details of some of the issues that particular kinds of charities may consider in their investments. The issues included are not an exhaustive list and they are not intended as recommendations.
Areas of activity
animal welfare
armed forces, rescue services or ambulance services
arts, culture or heritage
citizenship or community development
education
environmental protection or improvement
harmony, equality and diversity
health
human rights, conflict resolution or reconciliation
poverty
religion
science
sport
work with disadvantaged groups
Animal welfare
It is possible to avoid companies that test products on animals, or that use ingredients tested on animals. Some charities may be concerned by cosmetics testing whilst others may also wish to consider animal testing by the pharmaceutical industry. Many pooled investment funds consider animal testing of non-medical products.
Charities may also wish to consider whether companies are involved in the fur trade, intensive farming or meat sale.
Charities may also wish to consider environmental issues. The destruction of natural habitats could be particularly relevant for some charities. It may be possible to incorporate specific issues such as biodiversity, pollution and sustainable timber into investments.
Genetic engineering may also be relevant for some charities, particularly the genetic engineering of animals.
Armed forces, rescue services or ambulance services
Charities may be concerned by human rights issues and whether companies operate in countries with oppressive regimes. Other issues that may be relevant include the health and safety policies of companies and health-related issues such as tobacco.
Arts, culture and heritage
Arts, culture and heritage charities may be interested in issues of human rights and may wish to consider whether companies operate in countries with oppressive regimes (including those where freedom of expression is limited) without having a policy on human rights issues.
Environmental issues may be of concern to all charities and it may be of particular relevance to heritage charities.
Citizenship and community development
Charities working in the area of citizenship or community development may wish to consider issues that are relevant to the communities they work with. This could range from tobacco, alcohol and gambling to human rights and military involvement. How a company treats its staff and stakeholders and how it gets involved with local communities could be of particular interest to some charities.
Environmental protection or improvement
Environmental issues encompass a range of topics and approaches. The following issues may be of relevance:
- environmental management, policy, reporting and performance
- chemicals of concern
- climate change and greenhouse gases
- mining and quarrying
- nuclear power
- sustainable timber
- pollution
- biodiversity
- intensive farming
- genetic engineering
- military involvement (and the resulting damage on the environment - particularly for nuclear weapons)
- new environmental technology including renewable energy
Education
Education charities may wish to consider issues of relevance to the protection of young people and the interests of students.
In relation to the protection of young people, this could include considering the involvement of companies in the tobacco, alcohol, pornography and gambling sectors. This could involve a specific focus on how companies market their products to young people.
Universities may wish to consider issues that are important to students. Traditionally students have campaigned on issues such as armaments, human rights and the environment.
Harmony, equality and diversity
Charities working in the fields of harmony, equality and diversity may wish to consider a company’s policies on equal opportunities and diversity. They may consider more generally how companies treat their staff and other stakeholders, including suppliers, customers and local communities.
Other issues may also be of relevance, such as:
- human rights – for example whether a company operates in countries with oppressive regimes and how it addresses human rights issues
- military issues – for example a company’s involvement in military sales
Health
Health charities may wish to consider factors that can have an adverse impact on health such as tobacco, alcohol, pesticides or pollution. Depending upon the focus of the charity's work it may wish to consider issues such as food production methods (including intensive farming and genetically modified food), the availability of medicines in developing countries and the marketing of breast milk substitutes.
Some charities may feel that military and human rights issues can be damaging to health and are therefore relevant to the charity's objectives.
It may be possible to consider whether companies are involved in the provision of 'necessities of life' such as healthcare services. Some charities may wish to positively screen such companies into investments.
Human rights, conflict resolution or reconciliation
Human rights charities may wish to consider factors such as:
- whether companies operate in countries with oppressive regimes and if they have policies with regard to human rights
- supply chain management
- labour standards
- the treatment of stakeholders
- the governance and accountability of companies, for example in relation to issues of bribery and corruption
- a company’s involvement in the military sector
- if a company has been the subject of allegations of breaches of human rights principles
- if a company operates in developing countries, its activities in relation to the provision of medicines and marketing of breast milk substitutesy
- whether a company has any involvement in the pornography and adult entertainment industry
Poverty
International charities may wish to consider the operations of companies in developing countries. It maybe possible to incorporate the following issues into investments:
- supply chain management – including labour standards and child labour
- the accessibility of medicines
- the marketing of products such as breast milk substitutes and tobacco
- Third world debt
- how a company treats staff and other stakeholders
- how a company addresses human rights issues
Charities may also be concerned about the impact of military conflict on developing countries and wish to consider companies' involvement in military production and sale when making investments.
Some charities may feel that environmental issues are also linked to poverty, for example the creation of environmental refugees as a result of climate change. Charities with such concerns could consider the impact a company has on the environment and the way in which they manage this impact. All investors may wish to consider how companies manage environmental risks that could be materially significant.
Charities working domestically may wish to consider issues that some people argue can cause social problems leading to poverty - such as alcohol or gambling.
Charities may also wish to consider whether companies provide 'necessities of life' such as housing, utilities, food, clothing and waste disposal.
Religion
Faith-based investing has been a key part of the development of Responsible Investment. The modern roots of SRI in the UK can be traced back to the 1920s when the Methodist Church wished to start investing in the stock market whilst avoiding companies involved in alcohol and gambling.
Today there are opportunities for many faith-based charities to invest in line with their values and beliefs.
Issues such as gambling, alcohol, pornography and military are issues commonly considered by pooled investment funds.
A range of organisations and networks specialise in faith-based investing. These include:
3iG - the International Inter-faith Investors Group
The resource centre on this website includes papers on faith and investing from
a range of faith groups.
Visit website: www.3ignet.org
Christian Ethical Investment Group (CEIG)
Visit website: www.ceig.org
Ecumenical Council for Corporate Responsibility (ECCR)
Visit website: www.eccr.org.uk
Interfaith Center on Corporate Responsibility (ICCR)
Visit website: www.iccr.org
Islamic Bank of Britain
Visit website: http://www.islamic-bank.com
Science
Science charities may wish to consider issues such as the environment (for example the way a company manages its environmental impact) and other risks posed by climate change, human rights and tobacco (for example the sector’s use of scientific research).
Sport
Sport charities may be concerned with health issues, particularly how they affect young people. They may wish to consider issues such as alcohol and tobacco in investments as well as environmental issues.
Charities may also wish to consider whether companies provide ‘necessities of life’ such as housing, utilities, food, clothing and waste disposal.
Work with disadvantaged groups e.g. youth, age, ill health, disability, financial hardship
The issues most relevant for charities working to support disadvantaged groups will depend upon their activities and the groups they work with. For example, charities working with people with health problems may consider the health impacts of tobacco, alcohol and pollution when making investments.
Charities working with young people may wish to consider how companies involved in sectors such as alcohol market their products to young people, and may also wish to consider issues such as gambling, pornography and the environment.
Charities working with people suffering financial hardship may choose to consider the policies of banks towards financial exclusion when choosing which organisation to bank with.
Any charity working with disadvantaged groups may more generally wish to consider issues such as human rights and how companies treat people affected by their operations - which could include factors such as equal opportunities, supply chain management and health and safety.
Further details of the specific social, environmental and ethical issues mentioned above can be found in the charities area.
