English family

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English Family Foundation

DivestInvest

This content forms part of the DivestInvest guide.

When the English Family Foundation discovered the DivestInvest pledge in June 2015, they embarked on a surprisingly quick path to divestment. After signing the pledge, implementation was completed by the end of July.

The concept of divestment also prompted a conversation about climate change, family values and the goals of the Foundation. Founder Allan English was interviewed by Generosity Magazine shortly after, and said that signing the pledge “just made a lot of common sense, for all sorts of reasons.”

“Fundamentally, our purpose with the English Family Foundation is to create good in the world. Investing in fossil fuels is simply not aligned with our objectives. I would never portray myself as an expert in that space but I know that sustainability is of vital importance – everyone in Australia knows that.”

“The clear message for the philanthropy sector is that the decision to divest is about values alignment – it’s not about where you do your grantmaking. If we say ‘we use our values to direct our philanthropy decisions’ then I encourage everyone to look at their own personal values and how they make decisions in the world, and see if they really do align.”

Process

The process for the Foundation was relatively straightforward:

  1. We assessed our current position in relation to our investments and investment strategy.
  2. We agreed on what we understood by the term ‘fossil fuels’.
  3. We considered the implementation issues of removing fossil fuels from our portfolio by looking at direct and indirect exposures.
  4. We updated the investment strategy and included the fossil fuel definition we agreed on.
  5. We implemented the changes to the portfolio.

Barriers and costs

The only barrier for us in divesting was undertaking the process. To divest, the Foundation needed to look at the risks and opportunity costs, as well as any implications for achieving its philanthropic goals. The main cost associated with the divestment process was the time spent having conversations with family members and other members of the Foundation, and then writing, signing and implementing the new strategy.

Ease of exit

The Foundation’s fossil fuel investments were highly liquid and therefore easily divested.

Who helped?

The Foundation’s existing external adviser assisted in the process.

How has the portfolio performed since divestment?

The portfolio has performed exceptionally well since the Foundation divested. Allan English has been outspoken about inadequate investment advice. He told Generosity Magazine, “I know that when foundations with a family office or investment advisers first raise the issue of divestment, the response they will get from those advisers is something along the lines of ‘If we exclude investment in fossil fuels then you’ll potentially get lesser return on our corpus’.”

“I have no expectation that I’ll be taking less returns. There are so many good investments doing good work and delivering good returns that come from an ethical base.

Top three recommendations

  1. Take the time to understand your values and beliefs – discovery of one’s values is the first step.
  2. Identify your goals.
  3. Align your investments with your goals.

Ethical considerations aside, Allan says the smart money is on innovation. “Our role with the Foundation is to increase the value of our corpus. I see investing in fossil fuels like investing in steam trains – why would you do that when you could be investing in jet planes all over the world?

There will always be a role for steam trains, and power sources will take time to shift, but it’s a case of backing those doing good as opposed to those doing harm. There’s no doubt that’s where the future lies.

Further reading