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Our beliefs

 

We want to help build a just and sustainable world where everybody can live meaningful lives, with respect and care for ourselves, each other and the planet.

We believe that the purpose of money and the economy is to enable and serve human flourishing and a healthy environment, and that currently they do not.

We work through grants, investments and our own activities, seeking to create a fairer economy that serves us all.

In the words of our Trustees …

  • “Friends Provident Foundation exists to support, financially and otherwise, social change agents (individuals and organisations) that strive to create a more just and equal economy and society.”
  • “Friends Provident Foundation’s vision is a just and sustainable world where everyone has the chance to flourish.”
  • “Friends Provident Foundation’s mission is to create a fair economy so as to achieve this vision.”
  • “Fairness for people and a sustainable environment.”
  • “A fairer world, with less inequality both in resources and opportunities than we have now, that lives within its ecological means.”
  • “We believe in a world where everyone has what they need and contributes what they can, in a way that cares for the planet and supports life to thrive.”
  • “We believe that money and the economy should serve this goal, and that currently for the most part they do not, and we wish to work to change this.”
  • “A society in which members have fulfilling, purposeful lives, people are valued and included, safe,  secure and less vulnerable, live harmoniously, wellbeing valued over ‘growth at all costs’, and live within environmental limits.”
  • “To look for the improved wellbeing in people’s lives through the right use of money towards the economy, the planet and civil society.”
  • “We are open to brilliant ideas that will help and protect people and planet”.

 

A concern with how money and financial systems can be tools for bringing about positive change is part of all we do.

Firstly, we are proud to be a Living Wage Employer, accredited with the Living Wage Foundation. (This is different from the UK Government’s ‘national living wage’, which is a compulsory minimum wage premium for all staff aged over 25). Living-Wage-Logo

 

 

 

 

 

We also want to make sure our grant and investment support is part of the solution to issues around fair pay and reducing wage inequality and so we have, in addition, become an accredited Living Wage Friendly Funder

We therefore require that organisations we work with pay at least the Living Wage on any staff posts wholly or partially (and directly or indirectly) supported by us, unless we can agree that there are good reasons for this not to happen. We also support them to become Living Wage Employers themselves – and hence pay the Living Wage on all of their directly employed and contracted staff posts.

WeAreALivingWageFriendlyFunder

Investment Principles and Policy

  1. Our Principles as an Investor

Friends Provident Foundation focuses on exploring the role of money and financial systems as a force for social good. We aim to:

  • encourage thinking that deals with the cause of the problem;
  • transform the use of financial systems so that they offer social as well as economic benefits, alleviating social disharmony and inequality; and
  • pioneer new ways of thinking about how money is used to solve social problems.

The intentional use of our endowment is an important tool for the achievement of our purpose – alongside our grantmaking, convening, communication, advocacy and other activities. As a participant in the financial system through our endowment we have an opportunity to promote change that serves our mission.

We believe that our decisions on what to invest in, what not to invest in, how we exercise our stewardship responsiblities as a shareholder, and how we engage with the financial system as a whole in our capacity as an investor should contribute to our aim of building international, national and local resilience, and an economy that is fair, equitable and environmentally sustainable.

We believe there are certain industries and products that are so inconsistent with our mission that we should not invest in them under any circumstances. There are others that already directly make a positive contribution to the transformation we seek; wherever possible we will invest preferentially in these areas. And as a shareholder we can encourage a transition by all companies towards business models and ways of operating that are aligned with our mission. Our ethos as a foundation is to engage in dialogue and learning that promotes positive change. We seek to reflect this approach in our relationships with the companies in which we invest, and with our fund managers.

We are a small investor. We therefore invest in pooled investment funds. We will do our utmost to find pooled funds whose investment criteria match our policy, recognising that some funds may have additional exclusion criteria or may not be fully aligned with our vision of resilience. By engaging with our fund manager(s) and the market more broadly, and by working with others, we will seek to promote the supply of a broader range of investment options for mission-led investors.

Our small size also means that we seek to work with other others  who share our goals in our efforts to influence companies and markets as an investor. We reflect the priority that we attach to this area in our staffing and resourcing decisions.

  1. Our Investment Policy

2.1         How our investments contribute to our mission

We view the whole of our endowment as a tool to help us achieve our mission. Our aspiration is that all our investments should generate both financial returns and positive social and environmental returns. We allocate ca. 90% of our endowment to generate income to support our grantmaking, while at the same time supporting established companies whose business contributes to the kind of economy and financial system we wish to see, and encouraging all companies to move in this direction through our role as a a shareholder. We expect these investments to generate competitive market returns. We therefore refer to this as our ‘market-rate portfolio’.

We allocate up to 10% of our endowment to investments that generate particularly strong social benefits, and from which we are prepared to accept lower financial returns because these investments further our charitable objectives. We refer to this as our ‘social investment portfolio’.

Our approach to generating social and environmental returns in our market-rate portfolio is set out below. The table shows:

  • areas in which we will not invest under any circumstances because we judge that they are profoundly inconsistent with our mission
  • areas that we will particularly favour in our investments wherever possible
  • areas where will use our influence as a shareholder, working alone and with other ivnestors, to encourage changes in corporate practices that serve our mission.

If we judge that a company is behaving in a way that is no longer consistent with our mission, and if it has not responded to our efforts and those of other investors and our fund manager to promote change, we will work with our fund managers to remove the company from our portfolio if this is possible.

We work with our fund managers and others to continually refine our understanding of what business activities and company practices contributely positively to our mission, and to adjust our investments, engagement and other work accordingly.

Click on the image below to access the Investment Principles and Policy document:  

Investment Principles and Policy_Table 1

 

 

 

 

 

 

 

 

 

 

 

July 2016

Climate change: a proposed investment position:

What the Trustees are looking to achieve (and the related investment beliefs)

Whilst the Foundation is not primarily focused on environmental concerns, the Trustees are mindful of the view of a wide range of experts – as expressed most clearly in COP21 and Davos 2016 – that climate risk is arguably the biggest risk to economies today. This is reinforced by data showing that at least 85% CEOs polled recognise one or more climate-related risks to their company.

Thus, the Trustees wish to safeguard the Foundation’s capital with regards to both stranded asset risk – meaning risk relating to particular sectors that are carbon intensive – but potentially even more important, climate-related systemic risk  which is risk arising from general economic damage due to a range of factors.  The Trustees understand that climate-related systemic risk could have a highly negative impact not only on the Foundation’s assets but also its core mission and stakeholders, and hence seek to do whatever they reasonably can to help trigger a rapid transition to renewables.

Along with university endowments, religious organisations and other asset owners who are mission driven or have the wider public interest in mind, Trustees consider that the Foundation could help model how mainstream institutional investors should be relating to fossil fuel companies, heavy users and emitters (e.g. auto, building, steel, cement, energy utilities) and key enablers (e.g. lenders, insurance companies) since these major investors and lenders will be key to the management of systemic risk.

The Trustees understand that asset owners of the size of this Foundation can maximize impact by triggering action by these major investors and lenders through working with a range of other economic actors.

The Trustees wish to send the most powerful signal possible in the timeframe that is relevant, and in a way which is consistent with the Foundation’s current investment strategy (namely externally managed and in a pool fund).  Aware of both the strengths and limits of the other investor strategies (i.e. divest-invest and portfolio carbon management), and especially mindful of the need to significantly reduce GHGs within the next 10 years, the Trustees are of the view that “forceful stewardship” offers the best prospects of success.

How we intend to do this

  1. Require our external fund manager(s) to
  • Encourage investee companies to publish their 2C transition plans and, where relevant, support the relevant shareholder resolutions.  This will be a powerful driver for the eco-efficiency and green tech (i.e. intra-firm allocation of capital in alignment with rapid energy transition);
  • Encourage investee companies to reduce their negative public policy impact, which is one of the biggest causes of weak government policy (e.g. on carbon price and fossil fuel subsidies);
  • Encourage investee companies to align their capital expenditure and remuneration strategies with targets agreed at COP21;
  • Report on how they integrate portfolio carbon risk metrics into their mainstream risk management quantitative strategies;
  • Divest from pure play coal and tar sands as soon as possible and other fossil fuel companies as soon as it becomes prudent to do so.
  1. Keep the possibility of high profile divestment alive, especially with oil and gas companies, if a public policy signal needs to be sent (e.g. if the company is a serial laggard with a non responsive board or may be funding organisations that deny climate risk).
  1. Increase our exposure to renewables, especially through long-term investment strategies and impact investing.

July 2016

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