CHARITIES ETHICAL INVESTMENT FUND. Delivering performance Reflecting your values

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1 CHARITIES ETHICAL INVESTMENT FUND Delivering performance Reflecting your values

2 A diversified fund for long term investors, managed in line with your values. 3

3 INTRODUCTION TO THE FUND ASSET ALLOCATION AND STOCK SELECTION The Ethical Investment Fund aims to provide a good longterm total return whilst delivering a consistent distribution to investors. A search for long-term sustainability underlies all our investment decision-making. We look for high quality investments that will deliver predictable and growing returns to investors whilst respecting the needs of the environment and society as a whole. The Fund is managed in line with an ethical investment policy that has been set by our clients. The requirement to deliver a strong long-term return means that we have a high allocation to assets that benefit from growth in the world economy, such as company shares and property. We invest in other assets including bonds and alternative investments according to market conditions in order to reduce short-term investment risks. Before investing, we carefully assess the environmental, social and governance behaviour of companies alongside their financial performance. We believe that poor corporate behaviour results in increased investment risk as well as an unacceptable impact on society. We also seek out investments that deliver strong financial returns alongside positive impacts on society. In our choice of equities we select companies that we believe will deliver sustainable and growing profits without relying on risky financial gearing. We emphasise those with strong recurring cash flow, high returns on equity and sound balance sheets. 2 3

4 ETHICAL INVESTMENT APPROACH OUR APPROACH TO CLIMATE CHANGE We are keen to control the individual underlying investments made by the fund, and as a result limit as far as possible the use of third party pooled funds. This allows us to ensure that the holdings are consistent with the investment objectives and also with the ethical and responsible investment policies our clients select. We always avoid investments in companies with unacceptable environmental, social and governance behaviour, and have ethical restrictions based on the guidance of our Advisory Group, drawn from the investors in the Fund. We manage the Fund with the aim of ensuring that ethical restrictions do not impact on long-term financial returns. The ethical restrictions are those prioritised by investors in the Fund, and include the following: Climate change is of critical importance to investors and we pay particular attention to the risks and opportunities that it poses as well as the requirement for a transition to a low carbon economy. We automatically exclude assets most immediately threatened by these developments such as energy coal and tar sands. We also avoid all energy companies that do not recognise the challenges ahead. The Fund has a low exposure to the conventional energy sector and has a carbon footprint that is substantially below that of the market as a whole. In order to encourage companies to accelerate their move to a low carbon economy we have an active and broad engagement programme, seeking private dialogue but also co-filing shareholder resolutions at annual general meetings. Companies involved in the production of landmines, cluster bombs or nuclear weapons Companies which derive more than 10% of their revenue from alcohol, gambling, adult entertainment, tobacco, strategic military sales, civilian firearms or high-interest lending Companies in the extractives and utilities sector that lag in the transition to a low carbon economy The full ethical investment policy is available on our website. 4 5

5 ACTIVE OWNERSHIP ETHICAL INVESTMENT AVAILABLE TO ALL Active ownership is a key part of encouraging positive corporate behaviour and is integral to our work. We vote on all issues important to our investors and positively engage with companies where we believe the standards of business practice can be improved. We have programmes of work on climate change and public health, particularly childhood obesity. We seek behaviours that at least match agreed international norms such as the ILO Core Labour Standards and the Guiding Principles for Business and Human Rights. We undertake additional engagement work on issues suggested by the Fund s Advisory Committee. Our current focus is on helping companies address the risk of modern slavery occurring in their supply chains. Our previous work concentrated on the Living Wage where we had successful discussions with a large number of companies. The Ethical Fund is available to all organisations that meet the definition of the Charities Act The minimum initial investment in the Fund is just 1,000. MORE INFORMATION For more information about the Ethical Fund please visit our website ( or call us on If the Ethical Fund isn t exactly right for your charity s investment needs, we d be happy to talk to you about our full range of products and services. All of our products and services have strong long-term performance records, are fairly priced and responsibly managed. CCLA, Senator House, 85 Queen Victoria Street, London, EC4V 4ET CCLA are Tier One signatories to the Financial Reporting Council s Stewardship Code and was awarded the highest rating for stewardship in the UN-backed Principles of Responsible Investment assessment. 6 7

6 ETHICAL FUND ADVISORY COMMITTEE Peter Ullathorne Chair Sharon Allen Skills for Care Brother James Boner Conference of Religious of England and Wales Dominic Briant Migration Foundation Josephine Carlsson Feed the Minds John Ellis United Reformed Church Trust Fabian French UK Community Foundations Emma Holland-Lindsay National Federation of Women s Institutes Brian Hosier United Reformed Church Trust 8 9

7 ABOUT CCLA We manage investments for charities, religious organisations and the public sector. This is all we do. We believe that good investment management is like a well-tended garden, requiring constant attention, planting and pruning. Founded in 1958, we aim to deliver strong long-term returns and have unmatched experience in providing ethical and responsible investment to charities. We are independently owned by our clients with 7 billion of assets under management. CCLA Investment Management Limited and CCLA Fund Managers Limited are authorised and regulated by the Financial Conduct Authority.