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Supporting Scotland's vibrant voluntary sector

Scottish Council for Voluntary Organisations

The Scottish Council for Voluntary Organisations is the membership organisation for Scotland's charities, voluntary organisations and social enterprises. Charity registered in Scotland SC003558. Registered office Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh EH3 6BB.


Climate confident: Charity investments and net zero

Scottish voluntary organisations look after assets worth some £23 billion - a surprisingly large number. This includes physical property, such as church buildings and social housing, and the total of many small cash accounts. It also includes nearly £3bn of endowment funds, held by charitable foundations amongst others. In addition, many larger charities will hold at least some of their funds in stocks, bonds or other financial products, which in turn generate more money to help fund more charitable work.  

The question of how charities that do invest for financial returns should invest, is not new. At least as far back as the 1980s, some charities have brought their values and mission into this area, for example health charities avoiding holding tobacco shares. Climate change has become a particular focus of responsible investment approaches in more recent years. Glasgow was the first UK university to divest from fossil fuel companies in 2014, and the Church of Scotland followed suit in 2021. Internationally, civil society has also been active in a number of efforts to mobilise pressure on company’s through shareholder activism, with some success even at giant companies like Exxon and Chevron.   

This summer, the news has been bringing us nearly daily reminders that climate change impacts are here and accelerating: heat and fires across the Mediterranean, heat and storms disrupting Scouts in Korea, relentless heat in Mexico and the southern US, wildfires in Canada, record global air and ocean temperatures. And since Russia’s illegal invasion of Ukraine, the cost of energy and food have become even sharper issues than they were before, including for communities here at home. It feels like we are in a crunch moment in terms of the acceleration of clean, affordable energy, and the need to decisively move away from fossil fuels and to decarbonise other industries and sectors. The financial system has a crucial role to play in this.  

There are lots of ways that Scottish charities can play their part in responding to the climate crisis. For the small number of mainly larger charities with investment assets, their choice of investment approach is one key opportunity. However, I know from experience that this is an area in which even large charities may have limited in-house capacity, and charities can feel overwhelmed (or underwhelmed!) by the information and options available. Charity investment documents may have been drafted and agreed many years ago, and boards may be wary of making changes. Charities that show ambition and innovation in other areas of their work, can get caught up in a vicious cycle of low expectations when it comes to investments - not refreshing investment approaches, and then being frustrated at the disconnect between their mission and what their investment managers deliver.  

Late last year, I was pleased to be approached by the charities team at Cazenove, to collaborate on a report, which we have just launched in association with the Association of Charitable Foundations, as Climate Confident: Charity investments and net zero. Informed by a survey of 139 charities, two expert focus groups and eight peer reviewers, we hope that this report is a timely stocktake of charity investments and climate now, as well providing frameworks, tools and practical case studies to help charities to think about and take their next steps. As it says in the foreword: “This report does not tell trustees what they should do, but instead offers a framework to understand some of the choices available…. For those charities who have made commitments to act on climate, this report offers help and examples. For those who have yet to make such a commitment, we hope it will give added encouragement to do so”.    

I hope that this interests you enough to read the full report, where you will see a lot more about different options and approaches. However, as a taster, here are some key steps which would bring any charity up to a standard of good practice in this area:  

  • determine a net zero target year for your investments, together with interim targets 
  • put this into your investment policy or mandate; 
  • ask your investment managers for evidence of stewardship which has real world impact;  
  • agree with your managers how they will track progress and how you will hold them accountable; 
  • communicate publicly about what you are doing and why.   

Nick Perks is a freelance charity and philanthropy consultant, and co-author of Climate Confident: Charity investments and net zero.  

Last modified on 13 March 2024