News and hot topics
This section provides details of recent news stories on charity SRI and issues currently attracting attention and debate.
News
ECCR publishes Guide to Investment and Engaging with Companies for faith communities
New Charity SRI events in Manchester and London
First National Ethical Investment Week
Oxford University report suggests investing in SRI funds does not mean sacrificing returns
First Practical Guide to Mission-Related Investing by Foundations Published
ABI research finds that good corporate governance gives better returns
US foundations align investments with their charitable goals
Joseph Rowntree Charitable Trust named as Britain’s most admired charity
Gates Foundation criticised over investments
Joseph Rowntree Charitable Trust withdraws £2m from Reed Elsevier over Arms trade exhibitions
Hot topics
Programme and Mission related investment
News
ECCR publishes Guide to Investment and Engaging with Companies for faith communities
July 2008
Church-based corporate responsibility research and advocacy group the Ecumenical Council for Corporate Responsibility (ECCR) has published a new guide to help church members, faith communities and other responsible investors in influencing companies on the basis of Christian and ethical values.
Co-sponsored by responsible investment specialists EIRIS and Ethical Screening, ECCR’s Guide describes and explains:
- the relationship between faith, values and finance;
- the `business case’ for corporate responsibility;
- why faith groups need to invest responsibly;
- how churches hold their funds;
- how invested funds provide opportunities for dialogue with companies and fund managers;
- the practical do’s and don'ts of dialogue and engagement.
New Charity SRI events in Manchester and London
April 2008
The EIRIS Foundation will continue its series of events for charity staff and trustees with a workshop on how to go about developing an ethical investment policy. Part of National Ethical Investment Week, the event will take place on 22nd May in London. On 30th June we will be teaming up with GMCVO to deliver a workshop in Manchester. This will provide an introduction to responsible investment issues. Find out more
First National Ethical Investment Week
April 2008
Organised by the UK Social Investment Forum (UKSIF) the first ever National Ethical Investment Week (NEIW) aims to highlight the benefits of green and ethical investment. It will be held throughout the UK, running 18th – 24th of May 2008. With involvement from the financial services industry, non-governmental organisations, community and faith based organisations, NEIW will encourage consumers to reflect on the social and environmental impact of their financial choices and consider a green and ethical investment option.
To find out how you and your supporters could get involved in National Ethical Investment Week please visit www.neiw.org
Oxford University report suggests investing in SRI funds does not mean sacrificing returns
March 2008
A survey conducted by independent investment consultants Jewson Associates has reported that investments in ethical funds does not automatically lead to poor performance. The survey, commissioned by Oxford University, found that SRI funds can perform better than non-SRI funds, but levels of volatility or risk may be higher. The review compared UK, US, European and global equity SRI funds with non-SRI funds over a ten year period.
First Practical Guide to Mission-Related Investing by Foundations
Published
March 2008
Rockefeller Philanthropy Advisors has published a comprehensive, practical guide that translates the concepts, ideas and philosophy of Mission-Related Investing (MRI) into useable policies and practices for foundation trustees.
It defines mission-related investment as encompassing any investment activity designed to generate a positive social or environmental impact in addition to providing a financial return.
The guide includes 12 US case studies that reflect the diversity of approaches used by organizations currently practicing MRI (including market rate and below market rate investments) and contains tools and templates for creating and executing MRI strategies.
New Passing Gear: Mission-Related Investing can be downloaded from www.rockpa.org
ABI research finds that good corporate governance gives better returns
New research from the ABI (Association of British Insurers) shows that companies with the best corporate governance records have produced returns 18% higher than those with poor governance.
The research also shows that shareholders investing in a poorly governed company suffer from low returns. £100 invested in a company with no corporate governance problems leads to an average return of £120 but if invested in the worst governed companies the return would have been just £102.
Other key findings include:
- The worst offending companies, which breached guidelines in every year examined, underperformed the average industry-adjusted return on assets by 3- 5 percentage points a year. There was also found to be a time lag of two to three years between any breach and the impact on performance
- The volatility of share returns is 9% lower for well-governed companies than poorly governed companies.
- The balance of the board is crucial. More non-executive directors (NEDs) on a board improves performance, though too great a number is linked to a fall in profitability.
US foundations align investments with their charitable goals
Los Angeles Times, December 29, 2007
By Charles Piller
In a sharp break from past practice, major charitable foundations are initiating or strengthening efforts to harmonize the social and environmental effect of their endowment investments with their philanthropic goals.
"A head of steam has been created around the issue of 'mission-related investing,' " said Douglas Bauer, senior vice president of Rockefeller Philanthropy Advisors, which consults with foundations. "More and more foundations are wrestling with the issue."
The $8.5-billion William and Flora Hewlett Foundation, based in Menlo Park, Calif., recently decided to vote shareholder proxies to reflect its charitable aims. When possible, Hewlett's investment choices also will be guided by effect upon society as a whole, not just financial gain. Endowment managers, the foundations said, "see the greatest investment promise in companies with enlightened managements that recognize that sustainable practices and sound employment policies are in the best long-term interest of their companies and shareholders."
JRCT named as Britain’s most admired charity
The Joseph Rowntree Charitable Trust (JRCT) has been recognised for its good work and ethical investment policy. It was named Britain’s Most Admired Charity at the 2007 Third Sector Charities Awards. The winners were chosen in an online poll by chief executives of the UK’s top 500 fundraising charities.
Stephen Pittam, Trust Secretary, said ‘The award is for all the organisations we support that are working for peace and conflict resolution, democracy, human rights and corporate accountability, and racial justice and a fair system for asylum seekers and new migrants in the UK. And we are delighted that the nomination highlighted the fact that we try to make sure the money we put into the sector is gained in ways compatible with our aim of promoting a more equal, socially just and peaceful society, through our ethical investment policy.’
Gates Foundation criticised over investments
In January 2007 the Los Angeles Times published a series of articles criticising the investments of the Bill and Melinda Gates Foundation and their apparent conflict with the aims of the Foundation. This sparked much debate in the investment and philanthropic communities and caused the Gates Foundation to issue a statement defending its investment policy.
Los Angeles Times investigation
Dark cloud over good works of Gates Foundation (January 7, 2007)
Money
clashes with mission: (January 8, 2007)
The Gates Foundation invests heavily in sub-prime lenders
and other businesses that undercut its good works.
Opening the floodgates? (Charity Finance 2007)
Sam Collin of the EIRIS/UKSIF Charity Project analyses the implications for UK foundations of recent criticism received
by the Gates Foundation in the US.
Joseph Rowntree Charitable Trust (JRCT) Withdraws £2m from Reed Elsevier over arms trade exhibitions
In February 2007 JRCT announced its decision to divest from Reed Elsevier due to the involvement of the company's subsidiaries in arms fairs. It was later reported that the company had decided to end its involvement with arms exhibitions following protests from many parties.
Joseph Rowntree Charitable Trust press release
Reed Elsevier to quit arms exhibitions after ethical campaign
Hot Topics
Programme and Mission related investment
Programme and Mission Related Investment has been the subject of much debate in recent years. US foundations have been pioneers in this field. Interest from UK foundations is growing, but the terminology is not always well understood.
Programme Related Investment
Programme Related Investment (PRI), also known as social investment, refers to investments made primarily to further the aims of the charity. They seek a financial return but this can be concessionary and is not the primary motivation.
PRI can take many forms, including conventional investments, loans and guarantees. It can be used by foundations alongside their grant-making programmes.
The Charity Commission does not consider social investment (or PRI) in the same way as Socially Responsible Investment and charities should be aware of the separate guidance on this issue.
Mission related investment
Mission related investment (MRI) emphasises the importance of the mission when developing the investment strategy. It is broadly similar to, and uses the same approaches as Socially Responsible Investment. However, MRI encompasses both market-rate and below market-rate investments.
MRI overlaps with Socially Responsible Investment and programme-related investment.
For further information visit:
Charity Commission Charities and Social Investment
Compounding Impact: Mission Investing by U.S. Foundations 2007 FSG Social Impact Advisors
www.davidcarrington.net
David
Carrington is an independent consultant who has written and spoken about PRI.
Foundations and social investment 2005 Esmée Fairbairn Foundation
