How charities can think about sustainable investing

Earlier this year, we published research into the challenges facing charity trustees and a key theme emerged from our interviews around sustainability. The research, in partnership with the ICAEW (Institute of Chartered Accountants in England and Wales), found most charity trustees wanted to do more to contribute to environmental efforts but were unsure of what other measures they could take. For trustees who see their role of stewards of their charities’ future, they also recognise the need to balance this with their duty to manage their charity’s resources with care, skill, and prudence. 

Although terms like ESG (Environmental Social and Governance) and scope emissions have become part of the established lexicon in the corporate world, it is only relatively recently they have been mentioned in the third sector. In fact, during the webinar when we launched the trustee research, we were stopped by members of the audience of charity trustees and asked to explain what ESG meant when the acronym was mentioned by me and our partners on the panel.

Whilst the terms might be new, this is not a new concept for the charity sector. Charities consider ‘doing the right thing’ and ‘making a difference’ to be at the core of their purpose. I know we do at CAF. Essentially, the ‘social’ strand of ESG is central to what the sector does day in and day out. Several charities also pursue ‘ethical investing’ without even acknowledging it as an investment strategy, for instance choosing not to invest in companies when their activities conflict with their values.

However, charities are becoming increasingly aware of the role they want to play to prevent any further damage to the environment. Partly this means taking steps to ensure that they don’t just avoid certain investments, but also considering how they can have a positive impact on people and the planet.

Our new ESG investment funds 

We recognise that charities want to do good with their funds, whilst ensuring financial returns to secure the future of their organisation.

The new ESG investment funds through our subsidiary, CFSL, aim to do just that. We hope they will help charitable investors make the most of their investments and empower them to fund the causes they are looking to support.

Charities are at the heart of what we do, so we wanted to make sure we got these products right. We conducted several rounds of research, including in-depth interviews to find out what our charitable customers wanted and expected from us. Of the clients who took part in our research, 80% believed that ESG or ‘ethical’ policies were one of the main criteria they now consider when choosing suitable investments.

Hard work has gone in to making sure this group of products meets the requirements of the charity sector. This means balancing the sometimes-competing needs for robust investment returns, cost efficiency, and investing integrity.

It was clear that abrdn were best placed as a partner after running a rigorous selection process. They have a long-term commitment to ESG investing to deliver sustainable, long-term returns, as well as helping to address the challenges faced by the world today.

This new fund range aligns with CAF’s wider purpose, to accelerate progress in society towards a fair and sustainable future for all. We’re also committed to designing products and services specifically for charitable organisations. Ultimately, we want to enable charities to become more resilient and sustainable for future generations.