Posted on 21st May 2009
Environmental, social and governance (ESG) risks and opportunities should be more considered by trusts and foundations in their investments, says a new report from the EIRiS foundation.
Many trusts and foundations lag behind other asset owners on responsible investment; this is despite their support of pioneering social and environmental work through grants, says the report Sustainable returns: The value of environmental, social and governance factors for foundation investments. This creates the possibility of conflict between mission and investments for trusts and foundations..
“It’s not enough to just assume that ESG issues are being integrated into the investment process,” said Alastair Hanton, chair of the EIRiS Foundation. “Trust and foundations should question and encourage their asset managers to adopt and implement best practice in responsible investment.”
The importance of responsible ownership and long-term investing has been underlined by the financial crisis, which relies on accountability, transparency and consideration of ‘extra-financial’ research in the investment process. The report also states that responsible investing makes sound financial sense for trusts and foundations. It gives examples of evidence from the commercial sector that shows how consideration of ESG issues when investing can safeguard and enhance value for shareholders.
Sam Collin, author of the report and charity advisor at the EIRiS Foundation, said that there is compelling evidence that ESG issues can have a financial impact. “Trusts and foundations that fail to take ESG issues into account could be seen as acting imprudently and failing to secure their long-term financial sustainability”, she said.
More information is available on EIRiS' Charity SRI website.
