Equity investment refers to the ownership of a share in a company. Your charity could adopt a positive screening, negative screening and/or engagement approach to equity investments. It is possible to invest directly in companies and through a pooled investment fund.

Equities are commonly known as stocks and shares, and refer to the ownership of a share in a publicly quoted company. Owners share in the risk and rewards of the company’s performance.

Equity investments have been the focus of most responsible investment activity. Research is available on the social, environmental, governance and ethical performance of most publicly quoted companies. Investors can use the research to make decisions on companies to avoid or support. It is also possible to use the ownership rights that come with equity investments to engage with companies or vote on issues of concern.

The Responsible Investment options for equities depend on whether your charity invests through pooled funds or through a segregated approach.

Tailored investments

It is possible to develop a bespoke policy by which the fund manager will screen equity investments (on both positive and negative criteria) in line with your charity’s policy. Fund managers also engage with companies and, therefore, when deciding on which fund manager to employ, you may wish to examine their engagement policies and records.

It is also possible to invest directly in companies. You may wish to use the services of a research provider – such as EIRIS – to determine which companies meet your ethical criteria. You should take appropriate advice before making investment decisions.

Pooled investments

There are several equity funds, including common investment funds and retail funds, which employ responsible investment criteria. The Pooled Funds Guide provides a list of these.

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