Charities: Does your investment strategy fully reflect your ethical values?

27 August 2020

When the whistle blew on the investment strategies of high-profile charities such as the National Trust and Comic Relief, other UK charities immediately sat up and took note. As a result, most will now actively avoid investing in the likes of tobacco, alcohol, fossil fuels and armaments. But Alice Farrer, an Ethical Investment Manager at Sanlam, explains that responsible investing has come a long way, and more can be done to ensure charities are actively aligning their investments with their core values.
Whilst charity trustees have a duty to maximise the financial returns generated from investing their charity’s assets, the Charity Commission has also urged them to consider whether those investments are consistent with their aims. In the last few years, this has manifested in what is called ‘negative screening’, where trustees have been careful not to invest in companies that conflict with the aims of the charity such as activities believed to have a negative impact on the environment, health or human rights.


It has never been easier to invest with a conscience

But could they be doing more? With the government pushing the green agenda, and companies now publishing a ‘Corporate Social Responsibility’ report each year, it is much easier for charities to make positive and confident decisions around their investment strategy, rather than simply avoiding certain types of businesses.
In recent years, a more sophisticated approach to responsible investing has been gathering pace and it is becoming increasingly important that trustees can demonstrate they have given this some careful thought. They can now actively seek out firms that pass muster across certain positive corporate practises, such as environmental protection, human rights, consumer care, diversity and sustainability.
Indeed, there is an amazing amount of choice out there. You can actively choose to invest in companies that support, say, alternative and renewable energy, education, environmental protection, health care, and companies with fair working practises. The list is seemingly endless. Trustees are able to support businesses that show synergies with the charity’s values, whilst not undermining the potential investment returns.


Maximising performance and managing risk

One of the biggest barriers to socially responsible investing has always been the argument that so-called ‘ethical investments’ underperform mainstream investments.  But that no longer holds true. There is growing evidence that financial returns need not be compromised when investing ethically. In fact, when we compare the performance of Sanlam’s Socially Responsible portfolios over 6 months, 12 months, 3 and 5 years, versus the Investment Association benchmark (which measures the performance of all funds within each of the relevant sectors), our portfolios have consistently outperformed their peers who pay less attention to environmental, social and governance criteria.[i]

At the same time, these portfolios take a comparable level of risk across a range of asset classes and geographies. It can even be argued that those companies that are well regarded from an environmental, social and governance perspective are often better at managing risk and are therefore less risky investments for portfolios.

Our bespoke ethical service

Being responsible for the investment strategy of a charity is not for the faint hearted – especially if it’s not your area of expertise. Sanlam takes pride in working with charities to help them position their portfolios accordingly. We have over 20 years’ experience of helping trustees build an investment portfolio that reflects their charity’s values as well as their financial aims and attitude to risk. Most importantly, we ensure this approach is not cost prohibitive.
Our team of ethical investment specialists offer you the experience and expertise to support you in directing your capital in an ethical manner. They conduct an in-depth assessment to identify the precise criteria to apply to your portfolio, be that a standard or bespoke ethical approach. From here, they build an ethical portfolio tailored to your preferences.
Once your portfolio is in place, your portfolio manager will be there to support your ongoing investment decisions, and ensure your plans remain on track. We often enjoy a long-term and close relationship with our charity clients as we help them pursue their objectives, without compromising their beliefs.

For more information on Sanlam’s investment service for charities, please email Alice at

[1] Source: Bloomberg, Lipper, Morningstar, FE Trustnet and Sanlam Investments. As at 30th June 2020. 

Please navigate to a service or product page and add the document to your brochure to continue.

Name your brochure
Your details
Thank you!

Your brochure is on its way.

Brochure Confirmation - your brochure is on its way.

We hope you find this useful.

The value of investments and any income from them can fall and you may get back less than you invested.