Friends Provident Foundation, Joffe Trust and Blagrave Trust are inviting asset managers to make proposals for the management of funds totalling £32m.
The three charities have asked asset managers “impress us” on environmental and social impact. Those shortlisted will be asked to present their proposal to mission-led investors.
The competition hopes to show that current standards of impact and ESG (environmental, social, governance) investing are too variable, and bring investment management “out of the shadows”. It also hopes to signal what emerging best practice and asset owner expectations look like.
Alex Jacobs, director of the Joffe Charitable Trust, said: “We will be looking for intentional social and environmental impact, high standards of ESG integration covering exclusion, engagement and its escalation, voting record, and in-house expertise, plus impact reporting. We know there will be trade-offs between different approaches, and we look forward to seeing which perform well.”
Friends Provident Foundation is making £10m available for prospective managers, Joffe Trust is making available £10m and Blagrave Trust £12m. The charities said they are also in discussions with other asset owners about potentially joining the group.
Proposals need to be received by 7 February 2020, and four or five shortlisted asset managers will be selected by end of February. The shortlisted asset managers will be invited to present proposals at an event in early March 2020.
Proposals are being sought from a variety of asset managers, from boutique impact funds intentionally seeking out start-ups with solutions, to large ESG funds moving markets and transnational companies via their stewardship.
The charities intend to feature shortlisted candidates as examples of best practice in a state of the sector report. The aim of this is to share learning and signal to the market what emerging best practice and asset owner expectations look like.
'Charities should use all their endowment to achieve their mission, not just their income'
Colin Baines, investment engagement manager at Friends Provident Foundation, said: “There is growing demand from asset owners to have a purpose beyond financial return with their investments. This is reflected by the growth in funds labelled as impact, sustainable, responsible, green or ESG. However, the quality of these funds varies greatly with marketing claims not always aligned with investment practice.
“We wish to send a market signal that asset owners are demanding higher standards of impact and ESG investment. Asset managers will recognise that the standards expected by mission-led investors like us today often become the market norms of tomorrow.”
Jo Wells, director of the Blagrave Trust, said: “We believe that charities should use all their endowment to achieve their mission, not just their income. Like an increasing number of asset owners, we are seeking to maximise the social and environmental impact of our investments.”