Comic Relief has blacklisted arms, tobacco and alcohol companies from its investment programme – but balked at a wider ban on controversial businesses to "avoid an excessive reduction in the universe available for investment."

The Red Nose and Sport Relief charity was heavily criticised following an investigation by the BBC's Panorama programme that found it has shares in schemes that critics claim contradict the core aims of the charity.

Comic Relief moved to sell its holdings in tobacco, arms and alcohol companies, while it conducted an intensive two-month review of its investment strategy.

On Wednesday, the charity said it will no longer invest in those three areas, but did not look to create a wider ban in investing in other unethical areas.

The review panel, led by chair John Kingston, made five recommendations, including that the charity should aim for only a "small number of absolute prohibitions" on its investment blacklist.

"Comic Relief should screen out the sectors (or companies) that directly conflict with its vision or bring the most reputational risk," the report said. "To avoid an excessive reduction in the universe available for investment, [Comic Relief] trustees should aim for only a small number of absolute prohibitions."

The exclusion list will be reviewed every six months.

"The decision to exclude these areas results from an analysis examining controversial sectors against three criteria: Comic Relief's vision of a just world, free from poverty; its grant-making programme; and public opinion," the charity said.

Comic Relief's new investment policy should "reflect its vision" and aim to "do good rather than merely preventing doing harm."

"We now have an investment policy that is firmly in line with the ethos of the charity," said Tim Davie, chair of Comic Relief. "Public trust is the cornerstone of Comic Relief and we would be nothing without our many supporters to whom we have listened and will keep listening."

Other recommendations include increased transparency about its investments published in annual accounts.

Comic Relief will also build stronger links between the investment committee and charity trustees to ensure they are "aligned", including adding two trustees to the investment committee.

The charity initially defended its strategy, with Peter Bennett-Jones, the co-founder of Comic Relief who stepped down as chair of trustees last year, insisting that investments were made on legal guidelines which state they must yield the best possible financial return.

"This is both an important and a complex area, and I am glad that the trustees accepted all our recommendations," said Kingston. "I hope the report will help other charities as they consider similar investment policy issues."

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