Finance News: Outlook - Help trustees on ethical investment

Helen Verney, director of finance and IT at the MS Society

Committees would welcome guidance on socially responsible investing.

I've heard claims that socially responsible investments will bring you higher investment returns. I've seen the graphs and I've looked for the stampeding droves of investment houses shifting their portfolios.

So far, it's been in vain.

Like Alfred Doolittle in My Fair Lady, I'm willing, I'm wanting, I'm waiting for it to be true. It would certainly make the lives of many finance directors, trustees and investment committees easier. The pressure on charity trustees, who are responsible for more than £50bn of stock market investments, to take a moral stance with investment, whether or not they find companies' activities directly at odds with their missions, is on the increase.

The MS Society, like many other charities, regularly reviews the issue, but having failed so far to find direct adverse links between industry activities and its mission, has not yet sought to exclude any industry from its equity portfolio. We will also be reviewing 'positive investment' opportunities this year, which might involve influencing companies through shareholder activism.

In this regard, Charity Commission guidance allows a moral stance to be taken provided the charity doesn't lose out financially. This needs a clear steer from stakeholders, rather than the framing of policies on the personal views of investment committees.

It's a shame that scandal-hungry lobbyists haven't taken a more proactive approach to working with charities on ethical investment, instead of hounding them from a distance.

On a positive note, I recently visited the House of Lords for an unpleasant cup of coffee with the pleasant Lord Alton. He was apologising over a complaint I had made about a seminar on SRI in which a group of targeted charity finance directors were lectured without time remaining for audience comment. He understood that listening was essential, and I was pleased to hear that the problem had been due simply to an inaccurate clock.

One promoter of SRI speaking at the event, Ethical Investment Consulting, was looking to play the role of 'trusted adviser' to charity investment committees. This kind of service for charity trustees should be welcomed.

It covers the whole spectrum of SRI and beyond.

Trustees are in a tough position. The onus is on them to "adopt any ethical investment policy which they reasonably believe will provide the best balance of risk and reward for their charity".

Thus I revert to my initial thoughts - if SRI means higher returns, then markets will shift naturally. Meanwhile, robust stances should be adopted where there is conflict with mission, while more help is needed for trustees thinking about taking a moral stance on SRI.


- Charity trustees are responsible for more than £50bn of stock market investments

- Charity Commission guidance allows a moral stance provided a charity doesn't lose out financially

- Independent advisers on ethical investing would be a welcome aid to trustees.

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