Ethical investment boost among half of charities, research finds

Just under half of charity finance leaders say their organisation has increased their list of investment exclusions over the last two years, with environmental concerns cited as the top area being excluded.

More than half of those with exclusion policies in place specifically mention barring investment in firms that are harming the environment.

A half cite arms firms bans, and just under half are excluding gambling and adult entertainment firms.

Fossil fuel companies are cited by just under two in five, while three in ten mention alcohol firms among exclusions, and just under one in four cite tobacco as a blacklisted area.

However, many charity finance and investment leaders are questioning their ability to successfully screen out all unethical investments, according to finance firm Rathbones, which has carried out the research.

It found that just 6% of charities believe they are “very effective” at screening out potential investments that don’t meet their exclusion policy, three quarters say they are “quite effective” and 16% rate their screening performance as “average”.

“Despite increasing noise around a move away from ESG, our research shows that this is more important than ever for charities, and charity leaders are increasingly wanting to align investment portfolios to their values and purpose,” said Rathbones head of charities Andy Pitt.

“This growing emphasis on ESG isn’t just about meeting regulatory expectations or keeping pace with peers – it reflects a deeper commitment to protecting mission integrity.

“Charities are telling us they want partners who can provide tailored, values-driven investment solutions that go beyond simple exclusions, and offer proactive strategies that support long-term, sustainable impact.”

Rathbones’ research, which involved surveying 100 charity board, investment and finance directors and managers, found that nine in ten believe it is important for their organisation to have strong environmental, social and governance (ESG) credentials.

All those surveyed said they are concerned about the ability of their investment advisers to consistently meet their ethical investment requirements, with three in five saying they are “very concerned” about this.