The less comic side of ethical investment

A BBC Panorama investigation has revealed that funds managed on behalf of Comic Relief included investments, for a time, in arms, alcoholic drinks and tobacco manufacturers.

The BBC claims "Panorama has learnt that between 2007 and 2009, some of these investments, amounting to millions of pounds, appear to contradict several of its core aims."

Panorama pinpointed investments

including £630,000 in shares in arms firm BAE Systems and more than £300,000 in alcohol manufacturer Diageo.

The BBC also refers to evidence which suggests Save the Children censored criticism of energy firms to avoid upsetting corporate partners.

Both charities deny any wrongdoing.

For Comic Relief, which has raised over £1bn making it one of the UK's most wealthy and significant charities, it was clearly a wake-up call about ethical investment. It sounds like the process around decisions has been reviewed since the period in question, 2007-2009.

The main issue is careful selection of investments, in line with a company's values. This is all part of being credible and trustworthy with everybody involved: the public,  fundraising, partnership with other charities, governments and NGO bodies, front-line work using the funds as the end result of all the effort involved.

Hold on, a cynic might say, you've missed the point.

Surely what's important is getting the greatest return on investment, in order to create more funds for the charity to do more great work.

Money is money, right?

Wrong. The ethics behind the money, and how it is invested, is also important. All organisations need to look behind the numbers, at how the money is created.

What we value affects how we do things, including decisions about appropriate investments.

The question is nuanced: it is not an  absolute, about whether it is intrinsically 'good' or 'bad' to invest in defence or alcoholic drinks companies.

Both BAE and Diageo are leading British-based global business, high in the FTSE 100, with a long heritage. They are in high scrutiny sectors - but then, if you got nitpicky, there are plenty of those. And along the way they have had their share of exposure to ethical issues.

However they are legitimate businesses held accountable through good governance and regulation to navigate the particular challenges of their markets. Britain is a major force in global peacekeeping, we also lead developments in defence, so it would be naïve to say we should not have an arms business.

But is an investment in a defence engineering company in line with helping 'people affected by conflict'?

Diageo works closely with the Portman Group and Drinkaware on promoting responsible drinking. But the Health Select Committee recently questioned whether the big alcohol groups did enough, or were taking advantage of weaknesses in regulation around alcohol advertising. A tricky area, out of synch with another stated aim of Comic Relief - 'working to reduce alcohol misuse and minimise alcohol related harm'.

The issue is sticking to the stated purpose and values of the charity.

So questions are raised about the appropriateness of investing in arms or alcohol businesses.

As one of the most high profile charities, and instantly recognised brands, it has a responsibility to uphold its reputation and principles.

Its fundraising fests, every other year, galvanise the support of glitzy celebrities and hundreds of thousands of people up and down the land - from classic sketches to simple phone-in contributions.

It's one of the charities close to RY's heart. We hold events through the day, enthusiastically raising donations.

Sometimes the ethical colour of the money is grey, there's no straightforward black and white.

There is clearly no intent to harm, and no malfeasance, here.

Comic Relief has a very particular purpose and beliefs. It makes a clear and compelling case about its work, and needs to uphold the same views through its investments.

It's easy to say that investments are packaged up into a portfolio, but when the scale is this big - and the focus of the charitable work for which the funds are used is so specific - then it is both possible and imperative to pay attention to the money trail.

This is good governance, and good practice, to preserve the ongoing commitment of everybody involved.

These choices matter to all of us who support Comic Relief, and to help it continue to make a positive difference in the world.

1 comment
  1. alexandra sturdza
    Posted 11 December 2013 at 11:10:17

    Great post, Isabel!
    Going further, it also raises the issue of the professional-isation of charities that unfortunately often missed financial functions.
    Lots of donated money is, for example, lost because of a lack of knowledge in exchange rate risk management..
    Not to name and shame..but many foundations and NGOs face a similar issue as comic relief.
    Arguably, they should be as accountable to their members/ donators and society as the corporates they scrutinise

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