To us, responsible investment is a no brainer. As a grant-making trust which supports people working to transform the underlying causes of conflict and injustice, it is clear at a moral and pragmatic level we cannot divorce how we invest our money from how we spend it.
Experience also tells us that it is those companies which respect resources that will be the sustainable, long-term, out-performers of the future.
We have a long history of ethical investment. We used to screen companies against our extensive ethical criteria before allowing our fund managers to invest in them. But, with limited resources and a huge universe of companies, this was not a sustainable process.
As a result, in 2013 we undertook a radical rethink of our investment strategy and adopted a responsible investment approach. The key to this change was the recognition of the huge advances that certain fund/asset managers have made in recent years and the expertise that they could offer us.
Guided by our investment adviser, Nicola Parker, we noted that some managers were offering sustainable funds run in a responsible way. Because the companies held in these funds tended to be a good match for our ethical criteria, and the managers have relationships with them in a way that we did not, we felt comfortable in moving away from a controlled mandate to investing in a number of these funds.
We still maintain some of our negative criteria, especially those integral to our grant-making programmes. These are the standard negative screens – armaments, gambling, tobacco and new generation nuclear powers stations. We also avoid extractive industries with poor human rights or environmental practices.
It is unlikely that any managers who invest in a responsible and sustainable manner will invest in these areas anyway.
Post appointment, we don’t switch off. We keep our managers’ activities under review and have regular meetings with them to discuss their engagement activities and how they are voting their shares. Periodically we review their holdings. If we have concerns about any of them, we raise them and, if necessary, ask our managers to follow them up with the companies themselves.
Although all our managers are operating in the same investment space, their approaches vary. For example, while all of them have concerns about fossil fuels, some chose to exclude these companies from their funds while others believe that it is more effective to engage with them.
While JRCT has signed up to the Divest Invest philanthropy initiative, with a commitment to divest from all fossil fuels by 2020, we are open-minded about how our managers tackle this issue.
In addition to working with our managers, we have found value in sharing our learning in partnership. We are particularly active in the Church Investors Group and ShareAction’s Charities Responsible Investment Network which both have engagement programmes.
Through them, in the last year, we have spoken to companies on a range of issues including climate change and the Living Wage. We have also joined in other ad-hoc collaborative engagements including CCLA’s Aiming for A initiative (carbon disclosure) and Rathbone Greenbank Investments’ work on the Modern Slavery Bill.
It is still the early days of our new strategy and we cannot draw any conclusions yet about its efficacy. However, our initial judgment is that our efforts are probably doing good, both financially and socially.
Jackie Turpin is head of finance at the Joseph Rowntree Charitable Trust.
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