Fewer than a third of UK charities have looked at the debated issue of fossil fuel exclusion, according to the second annual Newton Charity Investment Survey.

The survey also showed that just 4% of charities are adopting some form of fossil-fuel exclusion in their investment portfolios.

Newton Investment Management, part of BNY Mellon Investment Management, surveyed 94 charities with combined investment assets of almost GBP 21billion – seeking their views on asset class returns, ethical considerations and board composition.

Jeremy Wells, senior client director of charities and institutions at Newton, said, commented: "We were surprised that so few charities had debated or adopted policies in this area, given the number of significant campaigns in the national media, particularly on fossil fuel-free investing – but it's a fast moving issue and it might be taking time implement change."

Biggest concerns

The survey also found that the biggest concerns for investment portfolios in the future include "caution", "income", and "volatility" with charities more caution about the returns they expect from their portfolios.

Just 8% expected returns of more than 9%, however, over a 10-year horizon, charities are more optimistic with 15% expecting total returns over 9% per annum.

Wells said: "In a year which has seen the FTSE 100 reach its all-time high, and then a global market fall around China's Black Monday, many charities are taking a more cautious view on the outlook for the next three to five years, compared to 10 years.

"This may be attributed to UK charities believing the current difficulties in the global economy and global markets will have resolved themselves entirely within a decade from now."

Other key findings from the survey include the fact that, in response to recent changes in regulation from the Charity Commission, 9% more charities than in 2014 are setting fund managers an annual total return target, with almost 90% feeling confident that these figures with be sufficient to meet obligations.

First published 12.11.2015

Lindsay.sharman@wilmingtonplc.com