Four in five not-for-profit investors see ESG as important, survey finds

Research has found that four in five not for profit investors for charities, foundation and endowments see environment, social and governance (ESG) concerns as important to their investment strategy.

Among these almost three in five consider ESG considerations to be ‘very important’ to their investment strategy and implementation, while more than one in five consider such issues as ‘moderately important’.

The findings will be revealed by bfinance in a report in the coming weeks involving the views of more than 60 not for profit investment professionals from across 16 countries.

However, it also found that 5% do not think ESG is important and 16% think it is of ‘minor importance’.

Engagement in ESG among not-for-profit investors includes carbon reporting and impact measurement.

Investment is mostly in equities, but also in fixed income, private markets, private real estate and hedge funds, bfinance’s research shows.

The latest findings follow last year’s landmark legal ruling last year that allows charities to focus on green investments, even if it means losing out financially by excluding a large part of the market.

This year the Charity Commission has clarified in its guidance that trustees have discretion to choose investment options provided they ultimately further their charity’s purposes.

“In this constantly changing landscape of responsible investing, Charities must clarify “their definition”, motivations and objectives around ESG as they relate to returns, risk and reputation,” advises bfinance director of ESG and responsible investment Sarita Gosrani.

She added: “Charities should ensure their investment managers have processes and tools for sound decision making for any investment in a portfolio.

“Recent regulations allows mission aligned impact investing. Whilst an exciting and rapidly growing part of the investment universe, we urge charities to implement training programmes make the most of the opportunity available to allocate capital with purpose.”

Among charities to ensure their investment and banking strategy considers ESG is Christian Aid, which in July cut ties with Barclays after it was revealed the banking firm is Europe’s largest funder of fossil fuels.

However, an Association of Charitable Foundations survey of funders published this summer found that the number investing in a post carbon economy had only increased slightly.