Nearly half of all senior executives who work for charities with at least £1m of investible assets, are ‘very concerned’ about the ability of the investment management advisers to meet their organisation’s ethical requirements.
A further 49 per cent say they are ‘quite concerned about this’, according to research from the charity investment arm of wealth manager James Hambro & Partners, shared exclusively with City A.M. today.
James Hambro & Partners research with 100 senior executives of UK based charities was carried out in June and July 2021. The charities interviewed have a combined £3 billion in investible assets (stock market related investments).
When it comes to selecting investments, 88 per cent of charity executives interviewed said it is important they have strong ESG credentials, with 36% describing it as ‘very important’.
Nearly nine out of ten (87 per cent) believe that the level of importance charities place on ESG when selecting investment will rise between now and 2024, with one in five (22 per cent) saying it will become significantly more important.
ESG is increasingly a requirement
The research finds that investment advisers focusing on the charity sector will increasingly need strong ESG credentials.
Some 82 per cent of charity executives interviewed say this is an important feature of their selection criteria when choosing investment advisers to work with, and 90% think this will become more important over the next three years.
“When it comes to their investments, because of the nature of their work, charities perhaps more than other institutional investors often have a greater focus on ethical and ESG issues,” said Nicola Barber, partner-head of Charities at James Hambro & Partners.
“They rely heavily on their investment managers to ensure that their investments meet their strict requirements in this area and do not put them at risk of controversy and negative publicity,” she added.
“However, our research suggests that some charities have concerns over the ability of investment firms to deliver in this area,” Barber concluded.