David Palmer: Faith Charities Forum - making a difference

15 Oct 2019 Expert insight

David Palmer from Epworth Investment Management reflects on the highlights from the Faith Charities Forum.

Epworth Investment Management was delighted to be a sponsor of the Civil Society’s first Faith Charities Forum on 12th September 2019.  I had the pleasure of speaking to a packed audience of faith based charities and the buzz at the event was amazing.

We explored ethical investing and how it can make a difference.  The starting point is to establish how important ethical investing is to your charity?  I’ve been working with charity investors for over 30 years and continue to be surprised at the breadth of answers to this question. Some trustees are very clear. Where they are privileged enough to have surplus assets that can be invested, the key objectives must be to maximise the investment returns that the charity receives, normally in as low a risk way as possible.  

Other trustees, whilst not losing sight of the need for investment performance, are equally focused on their obligations to ensure that the charity’s money is invested for a wider good. This might mean by avoiding companies that engage in harmful activities or through positive investment in companies that will improve our environment or quality of life. This latter bracket of trustee often draws the imperative for ethical investing from their Trust’s objectives, the demands of their donors and sometimes personal conscience.

One of the many challenges that trustees face is how to measure the ethical performance of their investments. Investment returns are easy to assess. Regulation requires clear reporting that shows how a charity’s portfolio has performed against an agreed benchmark; peer group comparisons are widely published. Assessing ethical returns is far more subjective.  If the objective is solely NOT to invest in an offending company then that is an easy issue to judge. However, much of ethical investing is about seeking to bring about improvements in behaviours and outcomes through shareholder action and engagement. 

Change is often very slow to materialise. There are some hard measures that a charity’s investment manager can point to such as its voting activity at company AGMs or the implied carbon footprint of the charity’s portfolio, but much of ethical performance is delivered through incremental steps that are very difficult to see, let alone measure.

However, one thing that I am confident of is that ethical performance will be improved where like minded investors work together. Epworth is part of the Methodist Church and we use our faith based approach to ethical investing to work with other investors to bring about these critical incremental changes. It could be getting transparency on the plantations that the UK food manufacturers source their tea from; getting the oil companies to set and report targets for their carbon emissions or putting pressure on the big technology companies to pay fair levels of tax and workers wages. 

Our voice is small but when we work together through investor coalitions such as the Church Investors Group, or the Institutional Investors Group on Climate Change, this voice becomes much louder. Not just because of the consolidated equity that we hold but also because of the constituents that we represent.  In our society, faith and charity investors still command respect. We will deliver better ethical performance when we stand together. 

David Palmer CEO, Epworth Investment Management Ltd

Epworth Investment Management Limited (Epworth) is authorised and regulated by the Financial Conduct Authority. Incorporated in England and Wales. Registered number 3052894. Registered office 9 Bonhill Street, London EC2A 4PE. 

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