12 February 2021 - Article
The Charity Commission has announced that it will consult on revised guidance regarding responsible investments in Spring 2021. The updated guidance will be supported by a refreshed interpretation of the law in this area.
At the beginning of 2020, the Commission published a blog post encouraging trustees to invest the funds they hold in reserve responsibly. The blog post asked the sector to share experiences and considerations around investing, including what the barriers are to responsible investment becoming more widespread.
From the responses received, the Commission identified that one of the main barriers to responsible investments was a technical one. Many felt the legal framework around investing responsibly creates uncertainty and the Commission’s own guidance, Charities and Investment Matters (CC14), also adds to the confusion.
The Commission, although noting that its role is not to instruct charities how to invest assets, does want to encourage trustees to invest assets in a way that is consistent with their charity’s purpose and values. This move reflects the increased scrutiny of how charities carry out their activities, coupled with heightened public awareness of the climate crisis, although the Commission has said it is not solely about climate change. A range of issues such as human rights records and treatment of the workforce should be considered as part of making ‘responsible’ investments.
We will provide further updates when the revised guidance has been published for a consultation to assess how it might impact trustees’ understanding of their legal duties when investing in charitable funds and the effect it may have on existing investment policies.