The past few years have seen both momentum and resistance in the world of responsible investment. While many investors and asset managers have made commitments to integrate environmental, social and governance (ESG) considerations, we’re also witnessing a wave of backlash: political pushback, accusations of “greenwashing,” and in some cases, a rolling back of sustainability commitments.
At the same time, the challenges we face as a society — from climate breakdown to biodiversity loss to growing inequality — are only intensifying. Against this backdrop, it has never been more important for long-term, values-based asset owners — and charities in particular — to lead the way on good stewardship and responsible investment.
Why charities have a unique role to play
Charities are mission-driven organisations with a duty to work in the public interest. Their investments are not just financial assets: they are tools that can either reinforce or undermine their mission.
- Long-term perspective: Unlike short-term investors, charities typically hold capital in perpetuity to serve future generations. This creates a natural alignment with sustainability, resilience and stewardship
- Values-based mandate: Charities are guided by values and social purpose. It makes little sense for an organisation working to improve lives or protect the planet to have investments that do the opposite
- Influence through capital: The combined investment power of UK charities is significant. Through voting, engagement and choosing responsible managers, charities can influence companies and markets
Responding to the ‘ESG backlash’
The current ‘ESG backlash’ is often framed as a reason to retreat. In fact, it is a reason to step forward. Responsible investment is not a passing trend or a political slogan — it is simply good investment practice.
- From a risk perspective, ignoring climate change, inequality, or governance failures exposes portfolios to material long-term risks
- From an opportunity perspective, investing in solutions to global challenges can drive innovation, resilience, and better returns over time
- From a mission perspective, aligning investments with charitable purpose strengthens credibility and integrity
Charities cannot afford to outsource their values. By showing leadership, they can demonstrate that responsible investment is about prudence, integrity and long-term thinking — not politics.
Stewardship as a core responsibility
Good stewardship means more than just screening or divestment. It’s about how asset owners use their influence and can involve:
- Being active and engaged clients. By developing relationships with asset managers (and/or other financial intermediaries), organisations make it clear that sustainability and alignment with mission are priorities and encourage key stakeholders to raise their own standards in turn
- Engaging directly with companies to encourage better practices
- Voting thoughtfully on shareholder resolutions
- Collaborating with peers to amplify impact on systemic issues like climate risk, human rights, or public health.
For charities, stewardship is an extension of their duty of care. Just as trustees are responsible for overseeing operations in line with mission, they are also responsible for ensuring investments support — and do not undermine — that mission.
Looking ahead
In the current climate, positive leadership from charities around responsible investment is not optional, it is essential. Charities can:
- Show that responsible investment and good stewardship is common sense – aligning mission, values, and long-term financial health.
- Provide a credible, values-led voice in the debate, countering polarisation with integrity and evidence.
- Inspire other investors — including pension funds, family offices, and foundations — to follow suit.
The challenges are real, but so is the opportunity. By committing to good stewardship and responsible investment, charities can protect their assets, amplify their mission, and help shape a more just and sustainable future for people and planet.
Lisa Stonestreet is Head of Communications and Charity Impact at the EIRIS Foundation. Visit EIRIS Foundation’s CharitySRI website for information and resources that help charities adopt and shape responsible investment best practices.