Investments

SOCIALLY RESPONSIBLE INVESTMENT: ETHICS OVER PROFITS?

Socially responsible investment (SRI) has been a firm feature of the investment landscape for many years now – but how do you balance your charity’s ethics with investment returns?

IDENTIFYING MISCONCEPTIONS

There's an in-built misconception that by choosing to invest ethically, an organisation sacrifices financial returns - and that when markets take a turn for the worse, financial goals can quickly take precedence over ethical concerns.

CHALLENGING ECONOMIC PERIODS ARE THE BEST TIME TO REVIEW SRI

In actual fact, times of economic crisis can be the perfect opportunity for charities to take a fresh look at their approach to SRI and ensure they can fulfil their charitable objectives, while still achieving a positive return.

INCORPORATE ESG INTO YOUR INVESTMENT DECISION-MAKING

The focus is now shifting to initiatives such as the United Nations-backed Principles for Responsible Investment Initiative (PRI). Devised by the investment community, PRI states that environmental, social and governance (ESG) issues can affect the performance of investment portfolios. It provides a voluntary framework by which all investors can incorporate ESG issues into their decision-making processes and ownership practices, rather than tackling them as a standalone exercise.

NOT ALL SRI FUNDS ARE CREATED EQUAL

But choosing the right fund in the first place is no easy task, thanks to the recent explosion in new ethical funds. It's important to remember that there are good and bad funds in this area of the investment world - just as there are in more 'mainstream' areas. This means it is crucial to identify the winners and losers to pinpoint the fund that fits both with your principles and your investment objectives.

DOING NOTHING IS NOT AN OPTION

With consensus building among charities that unaddressed SRI issues can - and do - have a negative impact on the global economy, the question is not whether charities can afford to invest ethically, but whether they can afford not to.

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CAF Financial Solutions Limited (CFSL) is authorised and regulated by the Financial Conduct Authority FRN 189450. Registered office is 25 Kings Hill Avenue, Kings Hill, West Malling, Kent ME19 4TA. CFSL is a subsidiary of Charities Aid Foundation (registered charity number 268369).

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