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Responsible investing policy

The Nuffield Foundation exists to improve people’s lives, and their ability to participate in society, by understanding the social and economic factors that affect their chances in life.

The research we fund aims to improve the design and operation of social policy, particularly in Education, Welfare, and Justice. Our student programmes – Nuffield Research Placements and Q-Step – provide opportunities for individual students, particularly those from disadvantaged backgrounds, to develop their skills and confidence in quantitative and scientific methods. We believe these skills are essential for people to participate fully in a digital knowledge economy.

We are financially and politically independent, but we often work in partnership with other organisations that share our aims and interests. Our research is founded on the rigorous analysis of evidence. We are forward-looking. We examine the emerging trends shaping a society where the value we attach to diversity may sit alongside the risk of greater social fragmentation. Social well-being depends on people feeling engaged with and supported by wider society and we expect the research we fund to improve the design and operation of social policy, especially in those areas which we have always identified as underpinning a well-functioning society – Education, Welfare, and Justice. We contribute to building the capability of social policy institutions to use research, so that people might have greater trust and confidence that these institutions are acting to support them and their best interests.

In order to maximise investment returns from global economic activity, our portfolio is broadly diversified and invested across a range of assets and strategies. As Trustees we delegate particular investment decisions to an Investment Committee which operates under guidelines covering our risk appetite and approach to responsible investing. These guidelines are revisited and refreshed periodically, most recently in 2018.

Our approach to investment reflects our values of independence, rigorous evidence and concern for effective social policy; in part this is reflected in our intolerance of passive investing. However, we recognise that our endowment is invested in the real world and consequently there is a risk that some investment decisions may be linked to corporate strategies or products which potentially undermine aspects of our mission. If we identify this to any significant degree we will not invest in that business or sector, and as far as possible we seek to minimise this across all our investments through our engagement with the managers who are responsible for the day to day investment decisions made on our behalf.

We do not usually exclude sectors or business activities from our investment strategy because there are difficulties in setting thresholds for contentious activities within large and diverse global businesses, and in determining where to draw the line within an integrated sector or supply chain. The breadth of our charitable purpose also makes it difficult to set boundaries on a restrictive approach. The exception is tobacco producerswhich, in suppressing their research findings, undertook activities that profoundly ran counter to the Foundation’s aims of making decisions based on research evidence.

Consequently our approach to Responsible Investing has three parts:

  1. Across our Global Equity portfolios we do not invest in businesses where the predominant source of revenue arises from the sale of tobacco. Where we are only able to invest a pooled fund and there is no ex-tobacco alternative offered by that manager we accept that we may retain an exposure to tobacco stocks.
  2. We routinely screen all new Private Equity and Venture Capital funds for potential business practices that we believe set out to exploit vulnerable people or operate in an otherwise egregious fashion. Where we suspect unacceptable behaviour underpins the business model we will not invest. Otherwise we ask for legal reassurance on ESG matters in line with our policy.
  3. We ask that our investment managers take account of ESG practices in their investment decisions. We prefer our managers to subscribe to the UNPRI[1], the UK Stewardship Code[2] or other formats promoting ESG responsibility. We expect our managers to invest in shareholder friendly companies that have regard to the long term environmental impact of their business model, have high levels of governance and appropriate remuneration policies, and have clear policies to promote a healthy, productive and motivated workforce across the supply chain.

The Trustees (through the Investment Committee) monitor the implication of this policy and review it from time to time.