Cazenove Charities launches a new report empowering charities to take action on climate change
The report, titled "Climate Confident: Charity investments and net zero” provides the context and considerations for a net zero investment strategy.
Cazenove Charities, in association with the Association of Charitable Foundations (ACF), has published a report exploring charities’ climate commitments and encouraging the use of investment strategies to take action on climate change.
The report, titled Climate Confident: Charity investments and net zero provides the context and considerations for a net zero investment strategy.
Research for the report highlighted that there is a groundswell of concern and action by charities around climate change, with 76% of respondents believing that charities should be making commitments to act on climate change; with 54% having actually made a commitment to date. However, people are looking for more learning and guidance, and there appears to be an implementation gap. Only 16% of survey respondents have set a net zero target, and just 10% have a net zero target that also applies to their investment portfolios.
The most common barriers to developing a net zero approach are concerns over investment returns and a lack of conviction in current investment solutions. There is a lack of confidence in how to address the transition to net zero in charity investment mandates and this report aims to provide helpful guidance for the sector.
We believe that clear and ambitious mandates that incorporate climate commitments can lead to transformative action.
The report includes four case studies from charities that have already set a net zero investment strategy, and outlines five steps to help charities get started.
Five steps to get started on your net zero investment strategy
- Agree motivations and priorities: is your primary motivation to reduce the risk of climate change on your investments or to have a positive impact on the climate? What other priorities do you have as charity investors, such as income targets or relating to your broader charitable purposes.
- Decide on time horizon and targets: the UK government has set a net zero by 2050 goal, but many charities have set more ambitious targets. It is important to decide on the base year and interim targets so you can keep track of progress.
- Implementation: do you want to divest from carbon-intensive sectors, engage with companies to encourage more ambitious climate action or allocate capital to companies specifically addressing the climate challenge? Or is it a combination of the three?
- Decide what you'll measure and how you'll track progress.
- Document the plan in your investment policy statement, so that all stakeholders - trustees, executives and your investment managers - know what you are collectively trying to achieve.
Emily Petersen, Portfolio Director, Cazenove Charities commented:
"Many Charities have the desire and ability to play a critical role in addressing climate change. We hope this report will give more charities the confidence to incorporate climate goals in their investment mandates and work with their managers to design a suitable net zero strategy. In doing so, they can potentially help to address climate risks, drive transformative action and achieve better outcomes for their beneficiaries."
Nick Perks, Charity and Philanthropy Consultant commented:
“We know that many charities want to play their part in responding to climate change, and that all charities need to manage risks and think how best to use their assets to further their charitable purposes. For charities that have investment assets, getting the right investment approach is one key opportunity. Whether your charity is thinking about this for the very first time, or has already made good progress, we hope the tools and frameworks and case studies in this report will encourage and support you to take the next step.”
Read the report here:
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About Cazenove Charities
Cazenove Charities forms part of Cazenove Capital, the leading wealth management arm of Schroders. Cazenove Charities are the trusted partner to over 1,700 charities, foundations and universities, helping to achieve their financial and impact objectives.
We are proud to look after £9.7bn for the charity sector at 31st December 2022.
Our services are designed to offer comprehensive and customised support to the full sector, working with our clients to push for progress with sustainable investments.
When investing, your capital is at risk. Cazenove Capital is a trading name of Schroder & Co. Limited. Registered Office at 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.