The King’s property will move £100m into ethical investments following revelations of bona vacantia.
The estate of King Charles has declared that it will be moving over £100m into ethical investment funds. This money includes funds that were collected from deceased individuals through the outdated process of bona vacantia. The decision comes after an inquiry by the Guardian.
The unexpected declaration is a response to increasing scrutiny of the king’s handling of the Duchy of Lancaster’s collection of funds from individuals who pass away in the north-west region of England without a will or immediate family.
The Guardian recently reported that a portion of the funds were being used in secret to refurbish properties owned by the king and leased out for profit by his estate. The duchy admitted that some of the money from unclaimed estates is being used to restore what they consider to be “public and historic properties”.
The king’s estate has faced additional scrutiny regarding its handling of a different portion of unclaimed funds, which are allocated to its charitable organizations.
Two of the charities have utilized the concept of bona vacantia to establish significant endowment funds valued at over £40m. Their financial records indicate that there are no designated limitations on the investment portfolio regarding ethical, social, or environmental concerns (ESG). However, investment managers are instructed to consider such matters when making decisions.
The Guardian reached out to the Duchy of Lancaster this week and at first, they did not disclose if their charities had invested in oil or gas, tobacco, weapons, or mining companies. However, on Friday, a representative for the estate stated that there had been a shift in their approach.
The spokesperson stated that the Duchy of Lancaster is following the king’s consistent endorsement of ethical investing by starting to shift its investment portfolio into ESG funds. It is anticipated that this transition will be finalized by the conclusion of the fiscal year.
The change will align the investment strategy of the Duchy of Lancaster with that of the Duchy of Cornwall, another royal estate that receives unclaimed funds and follows an ethical investment policy. The Duchy of Cornwall was previously owned and carefully managed by the king, generating profits for the heir to the throne. Upon Charles’ ascension to the throne, it was passed down to his son, Prince William.
Charles received the Duchy of Lancaster from his mother, which is used to generate personal income for the monarch. The duchy and its charities have investments, including a portfolio of stocks, bonds, and other financial assets totaling £74m according to its records.
Two of the charities it passes bona vacantia revenues to, the Duchy of Lancaster Benevolent Fund and Duchy of Lancaster Jubilee Trust, have also built large endowment funds, worth £18m and £26m respectively.
Both charities’ financial statements indicate their goal of achieving a yearly profit of £500,000 through their investments. They measure the performance of most of their stock investments against the FTSE All-Share Index, which tracks companies like Shell, BP, and British American Tobacco.
According to Ben Faulkner, a member of ethical investment firm EQ Investors, comparing oneself to a benchmark index may result in duplicating investments in the same companies. This approach, also known as index tracking, is frequently utilized. In this process, a larger portion of investments is typically placed in the top-performing companies within the chosen index. For example, Shell is currently the largest publicly listed company in the FTSE All-Share Index.
Over the past five years, the Duchy of Lancaster Benevolent Fund has generated approximately £2 million in revenue from its portfolio of investments, while the Jubilee Trust has earned £2.5 million.
The Duke of Cornwall Benevolent Fund, managed by the Duchy of Cornwall, follows an ethical investment policy and has a £5m endowment. Their financial records state that the fund is invested solely in the Newton SRI Fund for Charities, which is a diversified portfolio of stocks and bonds with a focus on environmental, social, and governance factors. The investments are screened against negative criteria for socially responsible investing.
The Duchy of Lancaster recently announced a comparable policy, sparking concerns about the royal estate’s use of funds from bona vacantia. While they have previously stated that proceeds are donated to charity after deducting costs, they now acknowledge that some funds are also allocated towards the restoration and repair of eligible buildings on the estate.
According to leaked documents, the properties that are qualified to receive funds consist of a group of properties that are leased in order to generate profit for the king. These include vacation rentals, farmhouses, a barn on a shooting range, and a gas station.
The duchy acquires unclaimed assets from individuals living in the historical county of Lancashire, which encompasses Lancashire and portions of Merseyside, Cheshire, and Cumbria.
“I, Cat Smith, Member of Parliament for Lancaster and Fleetwood, was also taken aback by the revelation that in the county palatine, individuals who pass away without a will or heir have their assets inherited by the king instead of the state. This outdated and unfair practice traces back to medieval times and I plan to seek guidance on ways to modernize the rights of my constituents and move away from feudalism.”
Her comments come after criticisms from two mayors from the north-west of England. “This appears to be a bizarre remnant of feudal Britain,” said the Greater Manchester mayor, Andy Burnham. “At the very least, people in the north-west are owed transparency and accountability. They should also have a say on how these proceeds are used. I would call on the government and the Duchy of Lancaster to initiate a public consultation on this issue to work towards a set of arrangements that could command greater public consent.”
The mayor of Liverpool, Steve Rotheram, has also shared his worries. He believes that important causes have been overlooked and instead, money has been used to improve royal properties. Rotheram hopes that this situation will be addressed promptly and if funds have been misused, they should be returned to the charities they were intended for.