Two in three senior executives at charities are concerned about potential reputational and brand damage caused by their stock market investments, a snapshot survey has found.

The study involved the views of more than 100 leaders, including board directors, finance directors and investment managers, at charities with a collective stock market investment of just over £4bn.

Only one in three say they are unconcerned about reputational risks caused by their charities’ investments.

Seven in ten are concerned by increased scrutiny of charities, while three in five fear damage to their reputation through negative social media comments.

“Charities are coming under increased scrutiny and the rise of social media is making it more difficult for organisations to answer criticism,” said Andy Pitt, head of charities at Rathbones, which carried out the survey.

“Investment management and the squeeze on their budgets are adding to the rising concern about reputational and brand damage underlining the need for charity trustees to ensure their investment portfolios are aligned to their values and purpose.”

ESG's increasing importance

More than nine in ten charity finance leaders, who responded to a separate survey in July published by Investec Wealth and investment, said environmental, social and governance (ESG) issues will become increasingly important to them when selecting investments.

Two years ago a landmark legal ruling was made that allowed charities to focus on green investments, even if it means losing out financially be excluding a large part of the market.

Charities that have ensured their investment and banking strategy considers ESG include Christian Aid, which last year severed ties with Barclays, after it emerged it was among Europe’s largest funder of fossil fuels.

---