Myth Busting

It's not legal

This is incorrect. Whilst trustees do have a duty to maximise financial returns from the way they invest their charity’s assets, the Charity commission encourages charities to consider whether their investments are consistent with the charity’s aims.  

The Charity Commission held a consultation with charities in 2021 to consider how clear its current guidance is and whether it should be expanded so the legality of responsible investing is clearer.  Most recently a new high court judgement (Butler-Sloss & Ors v The Charity Commission for England and Wales & Anor [2022] EWHC 974 (Ch) (29 April 2022), strengthened the case for charities excluding large parts of the investment market in relation to concerns around climate change. As stated by Bates WellsButler-Sloss provides comfort that there is no single ‘right’ investment policy for trustees to adopt. Trustees who apply themselves properly and reasonably to the task of balancing all relevant factors in formulating an investment policy which they believe in good faith to be in the best interests of the charity’s purposes should, in doing so, fulfil their legal duties.”

It's too expensive

This is a myth. It was once considered by some that responsible investing comes at a cost to financial returns. However, there is increasing evidence that responsible investment considerations can in fact increase financial returns. This is particularly true when taking a long term view of investing. For example, whilst fossil fuel companies may be a financially sound choice in short term, it is increasingly accepted that in the long term, their returns will be impaired as alternatives take their place.  

The Intentional investing report provides more detailed information on the financial considerations of Responsible Investing.  

It's too difficult

As with any new venture, responsible investing can seem daunting at first. However with the right support, you’ll be able to find the approach that best suits your charity. It is helpful to first decide and clearly define what goals you feel are best for your charity. For example, if you are a small charity, you might decide to focus on moving to an ethical bank or engaging with your employee pension provider. A large endowed charity might decide it wants to start by shifting a portion of its investments to an ethical fund. It is helpful to start small and see this process as an iterative one which evolves with the needs of your charity and as you gain confidence.  

Use our toolkit to find out which of our resources could best help you. 

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