Charities with investment assets must involve their whole organisation in an active conversation about whether to invest ethically, a commission established by chief executives body Acevo has said.

The report, Good with money: Why charity investment matters, says that a charity must make its investment policies “part of its identity”.

The report was produced by the Acevo Commission on Ethical and Responsible Investing for Charities and Social Enterprises, which was set up following criticism of charity investment practice.

The condemnation included a Panorama programme aired one year ago today, which criticised Comic Relief over its investments in arms, alcohol and tobacco, and a longstanding problem faced by the Church Commissioners after they were found to have invested indirectly in payday lender Wonga.

The report says chief executives and senior directors must be able to understand and explain the charity’s investment decisions, and that charities should be fully transparent about their investments and investment policies.

The commission surveyed 128 charities with investments ranging from less than £10,000 to more than £10m, and found that around three-quarters of respondents tried to invest in a way which was aligned with their mission. But just under one-sixth said they invested in pursuit of profit alone and did not allow ethical considerations to stand in the way.

The report says organisations must make their own decisions about whether ethical screening of investments is appropriate, but should consider it carefully.

“Charity leaders should engage their organisation in a conversation as to whether an ethical investment policy is appropriate for the charity,” the report says. “Irrespective as to whether they have adopted an ethical investment approach charities should disclose how their approach to investment best fits them as an organisation.”

The commission said it does not support changes in regulation or reporting requirements, and that change should be driven by culture rather than rules.

It says part of that cultural change must be more collaboration among charities to remove barriers to mission-related investment.

“The sector should proactively investigate opportunities to strengthen existing groups by linking them together and creating a stronger collective voice,” the report said.

The report also contains extensive guidance on how to establish an ethical policy, which it says is a potentially difficult and complex process.