Responsible investment consultation: UK Charity Commission publishes responses

Article 28 October 2021 Experience: Charities and non-profit

The Charity Commission has published a summary of the responses received to its consultation on draft updated responsible investment guidance. The consultation is considering how to update the Commission’s guidance on responsible investments, after it received feedback that it did not offer enough reassurance to trustees that they could adopt a ‘responsible’ investment approach. A draft of the updated guidance is here.

A point raised in the consultation was whether the term ‘responsible investment’ is helpful. Only 19% of respondent charities commented that they approved of how the term was used. The Commission’s proposed use made reference to taking a charity’s purposes into account, but many understand the term to include environmental, social and governance factors. It could also imply that other investment approaches are not responsible or less responsible.

However, there was significant support for the revised guidance generally with 42% of charity respondents including positive comments in their feedback. Other points raised include that the draft guidance has an implication that ‘responsible investment’ will generate lower returns, whereas there is evidence indicating that ‘responsible investments’ can match traditional investments.

The final updated guidance will not be published until the High Court has given its judgment in a case that has been brought by two charities, seeking a clarification of the law on responsible investment. That case will be heard in 2022. The Commission will then consider if further engagement is needed before publishing its updated guidance.

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