The WWF was established in 1961 out of an urgent need to address the hunting of wild animals to extinction. Today it is the world’s leading independent conservation organisation, working in more than 100 countries. Sebastian Cheek chats to UK chief executive David Nussbaum about managing the charity’s ‘rainy day’ investment portfolio.
What pools of assets does the WWF have?
WWF is now 54 years old and during that time we have had some money given to us in the form of endowments and additionally we have built up some unrestricted reserves. Some of the endowments and reserves are invested in an investment portfolio, the total value of which is about £16m.
Where is it invested?
It is invested through managers, currently 60% in equities, 37% in bonds, mostly UK government and corporate bonds, and 3% cash. Broadly speaking our approach to equities is direct investment only, however there are some exceptions where we would invest in funds, for example where the fund is specifically focused on something we want to invest in such as renewables.
What we don’t want is an emerging markets fund because that could be invested in all kinds of things, as the Church of England discovered with Wonga.
What is the investment objective?
We want to beat inflation – i.e. protect the real value of our investment portfolio. We set a target of RPI +3% over the medium term and that is consistent with the fact that the purpose of this fund is to cover us on a ‘rainy day’ for the costs that might arise. Those costs tend to go up in line with inflation so we need to make sure we are maintaining the real value of the portfolio.
How do you formulate the ethical screening process?
We have an investment committee which is a sub-committee of the board and proposes the policy and the trustees then approve it. In addition, the WWF network globally has some screening guidelines, which are not quite hard-and-fast rules but we report annually our performance against them.
What do you screen out?
We screen out about 45% of the UK market and 38% of the global market because the FTSE has a bigger proportion of fossil fuel companies than the global index. The main exclusions would be fossil fuels, which normally involve extraction companies, so coal, oil and gas are out. Obviously the world needs things like tin or copper, but often we find ourselves in tension with companies in those sectors where the places they have chosen to extract from or the ways in which they are going about it are causing damage to the natural world. The other exclusions include arms and
weapons companies and those involved in animal testing for cosmetic purposes or involving primates or endangered species. We also exclude aviation. Obviously we fly and recognise we need to fly but the emissions and the growth of aviation are quite serious issues. We are not in favour of runway expansion in south east England, for example, so we think it is better not to be in a position where we are seen to be making money from aviation. Also, tobacco and pornography companies as well as nuclear, certain timber, certain chemicals, intensive pig and poultry farming, genetic engineering and fur companies, are excluded. If it is de minimis we are not too worried, for example we invest in supermarkets and they sell tobacco products but it is pretty small and it is clearly not the business they are in. The percentage limits of company revenue derived from the exclusion criteria vary across those categories, so it is never more than 10% and often it will be 5% or
even 3%.
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