Non-financial factors are those which influence investment decisions and are primarily motivated by considerations other than financial. This is taken to mean any decision to disinvest or invest for which the primary motivation excludes consideration of the potential financial outcome. For example, withdrawing from tobacco investments purely on the basis of public health considerations or investing in a local social enterprise purely to achieve societal benefits.
Assessing whether a non-financial decision would have a significant financial detriment to the fund will always be a question of fact and degree and will vary according to the circumstances of each individual case.
According to the Law Commission, when making an investment decision based on a non-financial consideration, private sector trustees have a duty to ensure that the decision would not involve a risk of significant financial detriment to the fund and that it would be reasonable to assume that the scheme members agree with that decision. A similar provision may be found on page 9 of MHCLG's statutory guidance on Preparing and Maintaining an Investment Strategy Statement.
- Full name or Short Description
- Potential influences on investment decisions which are not based on financial outcomes
- Source of definition
- Law Commission
- Source and further information
- To Be Added
- Date created
- Date updated