Responsible Investing beyond your investments

A common myth regarding Responsible Investing is that its application is restricted to a charity’s investments. For many charities, particularly larger ones, it makes sense to first address their investment policy, as this is likely where they can make the most impact. However there are several other areas of a charity’s business which if not considered under the lens of responsible investing, can impact the charity’s reputation and conflict with its aims. These areas are also opportunities to further the charity’s mission.  

Below are some additional Responsible Investing considerations a charity could make.

Bank accounts and related products

You can consider extending your investment policy to incorporate the bank(s) with which you hold current accounts and any savings accounts with.  

Banks use the money that make from customers to invest in companies and institutions. There are very few prohibitions as to where a bank can loan or invest its money. As with a charity’s investments, it is also important to be aware of your bank’s lending policy, and especially whether this conflicts your charity’s mission and aims. Find out more about what to consider regarding your bank’s lending policy. 

Some banks will have a Responsible Investment and/or Stewardship policy on their website. You could also reach out to your bank manager to learn more about their current and future plans with regards to responsible investing. If you are unsatisfied with your bank’s stance, you can switch to a more ethical bank. This would involve switching any current and/or savings accounts you have, as well as your credit card if your charity has one. SwitchIt is a great resource to learn whether your bank is investing in areas you may wish to avoid.   

Employee Pension funds

An employee pension scheme is a great opportunity to incorporate environmental, social and governance (ESG) criteria, for charities of all sizes. Discussions about your charity’s employee pension is a useful way to engage your employees on ESG issues. Charity employees in particular are likely to be more concerned about ESG issues.  

If your charity provides an employee pension, the first step will be to assess your current pension scheme through an ESG lends. You can check with your pension provider on its ethical investment policy. If you are unsatisfied with the ESG criteria of the pension scheme, ask your provider if there are any alternative ethical options that your employees could switch too. If you feel your provider does not have an adequate ethical policy and cannot provide you with a satisfactory alternative option, you can look into changing pension providers. Find out more. 

Ethical Sponsorship or Donations policy

If you are a fundraising charity you can create or review your ethical sponsorship or donations policy for corporate or other sponsorships and donations. The policy should be there to ensure that you only receive funding from companies and individuals that meet your ethical criteria and that you would be happy for the public to know about. 

Employee policies

It would also be useful to review your policies relating to your employees, to ensure they meet similar ethical standards set out in your investment policy. This would include for example, your Safeguarding Policy and Equality & Diversity policy.  

Still wondering how you can further incorporate responsible investing into your charity’s activities? Read our checklist to see what else you might need to consider.

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