News
EIRIS Foundation paper calls for trusts and foundations to think again on financial risks
New handbook for climate related investment
Second edition of Mission in the Marketplace launched
Guide to community investment by us colleges and universities launched
Charities should go in for sustainable investment
Investing in the future: A time for SRI
Investment Management Association statistics suggest 'stickiness' of ethical investors
Research shows increasing impact of climate change on investment decisions
New resource centre launched to help foundations align investments with mission
Oxfam launches initiative addressing role of responsible investment in poverty alleviation
FairPensions publishes ranking of top fund managers according to responsible investment issues
Credit crunch may be catalyst for more sustainable markets
Campaign prompts Wal-Mart to change policy on Uzbek cotton
Eurosif Study reveals a European SRI Market valued at €2.7 trillion
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Programme and Mission related investment
News
Green money blog launched
June 2009
The EIRIS Foundation has launched a brand new, non-profit forum for green money issues. Featuring a wide range of news, views and discussion topics, the Green Money Blog serves as an independent resource on sustainable finance. Comments and suggestions for discussion topics and stories are welcome and can be submitted via the blog: http://greenmoneyblog.blogspot.com/.
The Foundation will also soon be launching www.YourEthicalMoney.org, a new non-profit one-stop-shop website on green and ethical finance.
EIRIS Foundation paper calls for trusts and foundations to think again on financial risks
May 2009
Trusts and foundations should consider environmental, social and governance (ESG) risks and opportunities in their investments to safeguard value and protect the interests of future beneficiaries –according to new research released by the EIRIS Foundation.
Sustainable returns: The value of environmental, social and governance factors for Foundation investments examines why issues such as climate change and corporate governance pose financial risks and opportunities for trusts and foundations.
Despite their role in supporting pioneering social and environmental projects through grants, many trusts and foundations are still lagging behind other asset owners when it comes to responsible investment. This can lead to significant conflicts between mission and investments.
The financial crisis has shown the risks that all investors, including trusts and foundations, are exposed to. It highlighted the importance of responsible ownership and long-term investing which require accountability, transparency,and the consideration of ‘extra-financial’ research in the investment process.
The EIRIS Foundation’s new report sets out why these values make sound financial sense for trusts and foundations. It explores the growing body of evidence to show how the integration of ESG risks and opportunities into investment can safeguard and enhance value for shareowners.
DownloadSustainable Returns paper
New handbook for climate related investment
April 2009
The Boston College Centre for Corporate Citizenship has launched a handbook on market rate climate investments that aim to create environmental benefits.
The ‘Handbook on Climate Related Investing across Asset Classes’ aims to show investors that climate risk and opportunity are reshaping the conditions in which competitive returns are achieved.
The handbook includes information on how to:
- Devise a portfolio-wide strategy to climate-related investing
- Identify asset class-specific considerations for climate-related investing
Each chapter of the handbook focuses on a different asset class and identifies three key issues and challenges for responsible investment.
Second edition of Mission in the Marketplace launched
April 2009
The US Social Investment Forum Foundation has launched an update of The Mission in the Marketplace: How Responsible Investing Can Strengthen the Fiduciary Oversight of Foundation Endowments and Enhance Philanthropic Missions. The publication is aimed at foundation officers and trustees of smaller foundations who are interested in aligning their philanthropic objectives across their entire organisations. The information has been revised to reflect data as of March 31, 2009, and includes updates related to SRI performance in the market.
Download publication
Guide to community investment by us colleges and universities launched
April 2009
The Responsible Endowments Coalition has launched a step-by-step guide to encourage colleges and universities to make market-rate community investments. The guide is aimed at higher education trustees and administrators and students who want to implement community investment programs on their campuses. Maximizing Returns to Colleges and Communities: A Handbook on Community Investment includes a sample community investment policy and investment portfolios.
Proxy preview 2009 launched
April 2009
A new publication has been launched to help foundations navigate through the US Proxy Season. Written by the As You Sow Foundation and funded by Rockefeller Philanthropy Advisers, Proxy Preview 2009 helps foundations understand how to leverage their investments to align mission and values by voting their shareholder proxies.
Charities should go in for sustainable investment
March 2009
Charities invested, so they share responsibility for global financial meltdown, argues Rosamund McCarthy in Third Sector magazine.
‘Charities are innocent victims of the financial meltdown. Blame can be attributed to bankers, short sellers, deregulation in the City and global capitalism: everyone but us.
However, as the recession deepens, shouldn't charities acknowledge some responsibility? Sure, they may not sell securitised debt leveraged into the stratosphere and their not-for-sale status rules out bidding bonanzas, but are charities really that saintly? The honest answer is no.
Charities are custodians of billions of pounds, which are invested, like anyone else's money, for the best return on a short-term basis. It is not only Icelandic bank accounts: it runs much deeper than that. Mission-connected investment, which is about a social return rather than the bottom line, has to be the sustainable way forward. If there is one thing the Charity Commission should do in 2009, it is a radical rewriting of its CC14 guidance on the investment of charitable funds to explain the virtues of mission-connected investment.’
Investing in the future: A time for SRI
February 2009
At the start of 2008 few people could have predicted that subprime would make it into the Oxford English Dictionary and Robert Peston would become a household name. But as markets crashed and banks collapsed it proved to be a very tough year for any charity with a stake in the stock market.
It is perhaps not surprising that with an estimated 19% drop in the value of charity investments and increasing pressure on resources that charities are focusing on income generation rather than reviewing their investment policy. Socially responsible investment (SRI) may be slipping off the agenda, at least for now.
But the need to safeguard investments and generate the best risk-adjusted returns is entirely compatible with SRI. Considering environmental, social and governance issues is more relevant than ever. It’s a time to re-visit rather than jettison ethics.
Investment Management Association (IMA) statistics suggest ‘stickiness’ of ethical investors
February 2009
According to figures released by the IMA, ethical funds saw retail inflows exceeding outflows every month since last February in spite of recent financial turmoil. Retail sales of ethical funds saw a net inflow of £54.8 million in the final quarter of 2008, a significant increase from £20.5 million in the previous quarter.
Research shows increasing impact of climate change on investment decisions
February 2009
The Carbon Disclosure Project (CDP)’s new research finds that 75% of the 80 CDP signatory investor respondents factor climate change information into their investment decisions and asset allocations.
New Resource Centre launched to help foundations align investments with mission
December 2008
A group of leading US foundations has developed a campaign challenging their peers to dramatically increase their investments in community development, environmental sustainability and other “mission investing" strategies. The More for Mission Campaign has developed a Resource Centre based at the Boston College Institute for Responsible Investment, to help foundations leverage their endowments through investments that support the foundations' broader missions without compromising their endowments' financial success.
www.moreformission.org offers strategies and tools for foundations to align their investments with mission.
Oxfam launches initiative addressing role of responsible investment in poverty alleviation
December 2008
Oxfam has launched its Better Returns in a Better World’ project with a discussion paper exploring the role of investors in global poverty alieviation. The project will encourage investors to take account of poverty issues in their investment decisions; and identify the key barriers to long-term investment in developing countries.
See Oxfam website for more information
FairPensions publishes ranking of top fund managers according to responsible investment issues
November 2008
FairPensions has published its annual survey of the responsible investment strategies and activities of thirty of the largest UK asset managers. Investor Responsibility? UK Fund Managers' Performance and Accountability on 'Extra-Financial' Risks highlights leaders and laggards, and charts progress since last year, in terms of engagement, integration of environmental and social issues, and transparency.
See FairPensions website for more details
Credit crunch may be catalyst for more sustainable markets
The current credit crisis could be the catalyst for a switch to more sustainable market practices that benefit investors and society at large, according to Donald MacDonald, chairman of the United Nations Principles for Responsible Investment (PRI).
Many observers believed the recent market turmoil could test investor commitment to responsible principles, but the number of PRI signatories leapt 65% since the start of the credit crisis. The initiative recently signed its 400th global institutional member and now represents $15 trillion in assets.
MacDonald said: “I think the increasing support for the PRI shows that investors in general have taken a long hard look at the credit crunch, and some of the practices that caused it, and decided they can benefit from more comprehensive analysis of investment risk, one which incorporates environmental, social and governance issues into decision-making and ownership practices. The tough environment for investors has increased interest in responsible investment as a driver of long-term value.” The PRI initiative believes that one of the positive effects of the global credit crisis has been to convince an increasing number of mainstream investors of the value of taking factors such as climate change, environmental and social disclosure and corporate governance into account when making their investment decisions and exercising their ownership obligations.
See Responsible Investor for more information
Campaign prompts Wal-Mart to change policy on Uzbek cotton
October 2008
A campaign, which included pressure from faith–based and socially responsible investors, has led Wal-Mart to cease sourcing cotton and cotton materials from Uzbekistan. The move is designed to persuade the Uzbek government to end the use of forced child labour in cotton harvesting. The campaign received major input from the Interfaith Center on Corporate Responsibility (ICCR), a coalition of nearly 300 faith-based institutional investors, representing over $100 billion in invested capital and the As You Sow Foundation, a non-profit organisation that promotes corporate accountability.
“As investors, we are concerned that the well-documented use of modern-day slavery in Uzbek cotton production poses potential legal, financial and reputational risks to companies, as well as grave moral concerns,” stated Vidette Bullock Mixon, Director, Corporate Relations, General Board of Pension and Health Benefits of the United Methodist Church, who sent a letter to Wal-Mart raising this issue.
“Wal-Mart has played a positive role in crafting a common strategy along with other stakeholders to end this egregious violation of children’s rights,” remarked Rev. David M. Schilling, ICCR program director. “We urge other companies to tell their suppliers to no longer purchase Uzbek cotton until the practices change, and to start requiring the country of origin of raw cotton fiber listed on all paperwork.”
For further details visit the ICCR website
Eurosif Study reveals a European SRI Market valued at €2.7 trillion
October 2008
Eurosif has just published the latest Sustainable and Responsible Investment (SRI) figures and trends in its “European SRI Study 2008”.
Based on a survey of asset managers and self-managed asset owners in 13 countries, the report reveals that total SRI assets under management (AuMs) have reached €2.7 trillion as of December 31, 2007 and represent as much as 17.5% of the asset management industry in Europe. This corresponds to a remarkable growth of 102% since December 31, 2005.
The total of SRI AuM in the UK was £764 billion with £54.1 billion
defined as Core SRI and £709.4 billion as Broad SRI.
For full details visit Eurosif website
Archive news stories
New Charity SRI event on environmental issues
Study finds European SRI funds on a par with conventional funds
Charities not investing ethically risk losing support of the public, survey finds
Unconventional oil investments environmentally and economically unsustainable, according to WWF
ECCR publishes Guide to Investment and Engaging with Companies for faith communities
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
New Charity SRI event on environmental issues
Opportunities for Green Investment will take place on Monday 17th November in London. This free seminar will help charities understand how they can consider environmental issues in investments.
Click here for further details
Study finds European SRI funds on a par with conventional funds
September 2008
‘The performance of European socially responsible funds’ was conducted by academics from the University of Minho, Portugal. The study investigated the performance of a sample of European SRI retail funds and concluded that the addition of social screens did not compromise financial performance.
Charities not investing ethically risk losing support of the public, survey finds
August 2008
The majority (83%) of the general public would be less likely or unwilling to give to a charity if they found out it was not investing ethically, according to new research released today by the EIRIS Foundation.
The GFK NOP poll of 2,000 UK adults found that 52% of the general public would be unwilling to give to a charity that is investing in a way that is against its mission, and a further 31% would be less likely to give.
Almost all (91%) of those surveyed agreed that charities should be investing their money in an ethically or socially responsible way. This highlights a mis-match between public expectations and the number of charities actually investing ethically – a 2006 study by ACCA found that just 55% of large UK charities had an ethical investment policy.
Click here to download press release
Unconventional oil investments environmentally and economically unsustainable, according to WWF
July 2008
Investments in oil from tar sands or oil shale are both environmentally and economically unsustainable and can only serve to undermine international efforts to combat climate change, according to a report released by WWF and the Co-operative Financial Services (CFS).
‘Unconventional Oil: Scraping the bottom of the barrel’ states that oil extracted from tar-soaked shale or sand is an energy and resource intensive product, creating up to eight times as many emissions as conventional oil production, while also using three barrels of water to produce just one barrel of oil and destroying large tracts of arboreal forests in the process.
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.
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
NCVO guide to programme related investment
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