E139 - Responsible Investment With Tristan Blythe
Updated: May 4, 2021
"There is increasing evidence that a responsible investment policy or practice doesn't have a negative impact on returns.” - Tristan Blythe
In this episode, we speak with Tristan Blythe, the Editor of Charity Finance at Civil Society Media , who has a keen interest in all things finance in the charity sector. We discuss responsible or ‘ethical’ investment and the opportunity for charity leaders to contribute to the Government’s responsible investment consultation, which closes 20th May 2021.
1. The Government’s responsible investment consultation
Responsible investment is of increasing interest to charities, however they are often unsure about their legal standing.
In January 2020 the Charity Commission launched a listening exercise to find out more about charities’ experience with responsible investment. In December 2020, the Charity Commission reported their findings which found barriers such as the lack of clarity around responsible investments.
Tristan hopes that the consultation and the wider conversation around responsible investments will result in it becoming the mainstream form of investment.
2. Why trustees should respond to the responsible investment consultation
We also speak about the importance of getting involved in the Government’s responsible investment consultation and why charities should invest.
The consultation guidance will be helpful for trustees, allowing them to explore what their responsibilities are around responsible investment. Tristan has received feedback from the sector on the development of the guidance so far. The guidance continues to be vague, so responding to the consultation will help to improve guidance, thus increasing trustees’ confidence when making responsible investments.
Tristan also suggests that responsible investments should be part of a wider conversation in the charity sector, as there is often an expectation for funding to be spent directly on programme delivery, despite the long-term value in investing. Tristan added that if your charity is able to invest, then it serves to “not only help the beneficiaries of today but also the beneficiaries of tomorrow”.
3. How charity leaders can consider the balance between maximising ROI and the ethical implications of investing
Tristan believes that there is a misguided view that investing responsibly will have a negative impact on returns. However this misconception derives from ‘sin stocks’ such as the oil industry. In future investment in industries like these could become ‘stranded assets’, as society moves towards a ‘net zero’ future.
Responsible investments are not only based around this exclusion model, it is also about engaging with companies’ management team to improve their practices. For example, if there is a social issue within the company’s supply chain, as an investor you have a seat at the table to challenge these practices. Consequently you will contribute towards fostering a better society in the long-term. Despite this, challenging companies is not possible for all charities due to the reputational risk, so your charity should know where to draw the line.
Ultimately, our actions can impact our world, and in this case our responsible investments have the potential for positive change.
Find out more about the Government's responsible investment open consultation here.
This episode is brought to you by our platinum sponsor Charity People.
For more about charity sector finance, please do check out:
E131 - Being The CEO Of Muslim Aid With Kashif Shabir - https://www.charitychat.org.uk/post/e131-being-the-ceo-of-muslim-aid-with-kashif-shabir