Investing in enterprises which seek to realise our aims
We aim to invest in sustainable companies which operate with integrity and whose products or services meet the basic needs of people and protect the natural environment on which we all depend.
We wish to invest in companies which offer solutions to problems such as climate change, resource constraints and loss of biodiversity.
We are also prepared to invest in enterprises which aim to generate social and environmental returns in line with our mission and our grantees’ work, even if they are not expecting to produce market levels of financial returns.
Avoiding investing activities which conflict with our aims
We do not invest in companies whose primary business is the extraction of fossil fuels
We avoid companies materially involved in armaments, gambling, tobacco and new generation nuclear power stations, and government bonds issued by states with high military expenditure or oppressive regimes. We avoid extractive industries with poor human rights or environmental practices.
We do not invest directly in companies which are profiting from the illegal occupation of Palestine.
We recognise that ethics are not always clear-cut and that difficult judgments need to be made. While on some issues a firm position is taken, on others the degree of a company’s involvement in a questionable area is taken into account, along with indications of improving practices and positive features of its activities.
Encouraging business to be ethical, socially responsible and to protect the environment
The Trust engages with companies, both directly and through its fund managers, to try to improve practices and may, in the event of on-going concerns, sell its shares and/or change its fund managers.
To assist our fund managers in understanding our engagement priorities, we occasionally produce publicly available statements outlining our expectations of our fund managers when engaging with companies on certain topics such a corporate tax or in certain sectors such as the technology sector. We encourage other asset owners to use these statements when engaging with their own investment managers to share best practice.
We recognise that collaborative engagement can often be more effective than engaging alone. We are therefore are happy to collaborate with other investors, such with our colleagues in the Church Investors Group and through the Principles for Responsible Investment (PRI)’s Collaboration Platform. Collaborative engagement has the advantage of improving the efficiency of engagement programmes for all participants by sharing best practice, pooling resources and leveraging a greater shareholder base to effect change.
We are also happy to support organisations working in areas of concern to us including the Institutional Investors Group on Climate Change, the Carbon Disclosure Project and the UK Sustainable Investment and Finance Association.
We wish to continue to lead by example as a responsible investor with the aim of improving corporate governance and social and environmental impacts. We encourage other investors to join us in following best practice as set out in standards such as the PRI and we have responded to the Financial Reporting Council (FRC)’s UK Stewardship Code. We believe this to be in the interest of society at large as well as in our long term financial interest.
How we invest
The majority of our endowment is invested through fund managers who have signed up to, and adhere to, the PRI and FRC UK Stewardship Code. We look for fund managers who integrate environmental, social and governance (ESG) issues into their routine investment processes. In selecting our fund managers we are careful to differentiate between the growing band of investment managers who claim integration but whose investment practice does not rely on it and those for whom such integration forms the basis of their investment approach and is a key driver of investment returns.
We also appreciate those fund managers who are willing to take into account our engagement objectives through:
- following up our specific concerns with investee companies
- taking our/our grantees’ engagement ideas forward
- taking part in collaborative engagement initiatives which we support.
There are a small number of companies in which we directly invest. We accept that the way we look at these investments is not as a financial analyst/fund manager would do but by building a relationship with the management team over time and familiarising ourselves with the business.
How we measure performance
We take a long term view of performance as is appropriate for our time horizon and above average risk tolerance. We monitor the market value of our fund holdings and other securities using returns over a rolling three year period.
We measure the performance of our managers against bespoke benchmarks and where screening has a material impact will run a concurrent screened benchmark.
We measure performance post fees and ask our managers to provide performance data that is annualised, post fees and in sterling, where fees are measured as a total expense ratio.
How we deal with risk
We manage risk in a number of ways including the following:
- we avoid incomprehensible, speculative and opaque investments
- we meet regularly with, and receive reports from, our fund managers and have robust procedures in place for monitoring their financial and non-financial performance, including engagement
- our fund managers and directly managed investments are kept under regular review
- we ensure that individuals with relevant expertise serve on our Investment Committee.
We report on our investment activities in a number of ways:
- our investment strategy and other investment policy documents are published on our website www.jrct.org.uk
- our investment performance, both financial and non-financial, including for example, our engagement activities over the course of the last year, are included in our annual report which is published on our website
- information on our holdings is published on our website
- we expect all our fund managers to disclose their policy on voting on their website and we encourage them to publicly disclose their voting record. Voting information on those shareholdings which trustees directly manage themselves is available on request
- our response to the FRC UK Stewardship Code is published on our website.