Climate Confident: Charity investments and net zero

Cazenove Capital, in association with the Association of Charitable Foundations (ACF), has published a report exploring charities’ climate commitments and investments. The report, titled Climate Confident: Charity investments and net zero, highlights a groundswell of concern and action by charities around climate change. 76% of the survey respondents believe that charities should be making commitments to act on climate change, however only 54% have made a commitment to date.

Whilst UK charities recognise the importance of addressing climate change to help achieve their charitable objectives, many charities are looking for more guidance on how to incorporate their climate commitments into their investment strategy.

Download the report here

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 report cites the common barriers to developing a net zero strategy such as concerns over investment returns and a lack of conviction in current investment solutions. It outlines the actionable steps charities can take to get started and includes four case studies from organisations that have already set a net zero strategy.

Watch the authors discuss the context and conclusions

From ambition to action

The report outlines five actionable steps to help charities get started on their net zero investment strategy:

1. Agree motivations and priorities: In setting your net zero target, is the primary motivation to reduce the risk of climate change on your investments, or is it just as much about your investments having a positive impact on the climate? What other priorities do you have as investors, such as income targets or relating to your broader charitable purposes?
   
2. Decide on time horizon and targets: The UK government has set a goal of reaching net zero by 2050, but many charities that have set targets are being more ambitious – it is important to decide on the base year and interim targets so you can keep track of progress.
   
3. Implementation: Do you have a preference for divesting from certain carbon-intensive sectors, engagement with companies to encourage more ambitious climate action, or allocating capital to companies specifically aiming to provide climate solutions? Or is it all three?
   
4. Decide what to measure and how you'll track progress.
   
5. Document the plan in your investment policy statement, so that all stakeholders – trustees, executives and your investment managers – know what you're collectively trying to achieve.

"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."

Emily Petersen, Portfolio Director and Sustainability Lead - Cazenove Capital