Charities are sticking to their ESG investment principles, despite pressure to relax policies to achieve higher returns, a new study from Rathbones has revealed.
A survey of senior executives at charities found 86% say it is important that investments have strong ESG credentials and 89% believe the importance of ESG will increase over the next three years. This includes more than a fifth (22%) who say ESG will become significantly more important when considering investments.
This stance towards ESG is being maintained despite 76% of charities reporting that they have come under pressure to relax ESG policies in order to deliver higher returns.
Kate Elliot, head of responsible investment centre of excellence at Rathbones, said: “It is clear that charities are sticking to their guns on ESG investing despite growing talk about an ESG backlash or the need to compromise ESG principles in order to achieve higher returns.
“Charities are very much committed to delivering on their values, and ESG investing is central to that as demonstrated by their plans to toughen up exclusion lists and to work with investment advisers that can meet their ethical standards. It is not a regulatory box-ticking issue for charities but central to their mission and purpose, helping them align their investments with the causes and communities they exist to support.”
Rathbones said charities are also planning to toughen up their investment exclusion policies with 67% saying policies will become stricter over the next two years, compared to 27% who believe exclusion policies will become looser.
Meanwhile, only a quarter (26%) questioned said they are currently very concerned about their adviser’s ability to meet ethical requirements, significantly lower than the 59% who said the same last year.
More than four fifths (85%) say investment advisory firm’s ESG credentials are important in the selection process and almost all (97%) say ESG credentials will become even more important in the next three years.
The research also highlighted changes in how charities address ESG with a growing focus on the social part over the next two years when selecting funds and investments. Around nine out of 10 (87%) say their charity’s focus on social investments will increase over the period, with 73% saying the same about environmental and 79% about governance.
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