Sustainability approach for cash funds

Our cash funds currently invest on behalf of our church, charity and local authority clients in the CBF Church of England Deposit Fund, the COIF Charities Deposit Fund and the Public Sector Deposit Fund.

These funds primarily invest in fixed income securities, which are certificates of deposit issued by financial institutions that are on CCLA’s approved counterparties list. In addition, these funds may use term deposits and notice accounts. These instruments and deposits offer a fixed interest rate in exchange for a predetermined holding period.

CCLA assesses potential counterparties based on their financial strength and a number of sustainability indicators. These indicators include:

1. our corporate governance rating
2. the counterparty’s signatory status with the Equator Principles
3. the counterparty’s position on CCLA’s UK and Global Mental Health benchmarks
4. the counterparty’s position on CCLA’s Modern Slavery benchmark
5. an assessment of the counterparty’s coal, oil and gas expansion policies.

In addition, CCLA routinely monitors counterparties compliance with Global Standards through our third-party provider to determine whether they are compliant with and/or whether they have significant or severe controversies. When significant concerns about their governance, or wider social and/or environmental impact are identified, counterparties’ eligibility for use by the fund is suspended.

Counterparties which do not comply with Global Standards, and/or have the most severe level of controversy (as advised by our third-party provider) are excluded. If they become non-compliant while we hold fixed interest securities issued by them in our funds, a time-limited engagement plan is created with regular monitoring by the CCLA Investment Committee. Should the counterparty not show sufficient improvement, the investment team has a six-month divestment window. Finally, no further fixed interest securities (or other types of cash instruments) issued by this counterparty can be purchased.

The full policy is available to download here.

September 2024