Charities ask for legal clarity on climate investments

08 March 2019

PA

Students in Berlin protest about climate change, last Friday. The messages on their placards included “System Change Not Climate Change”, and “We have no planet B”

Students in Berlin protest about climate change, last Friday. The messages on their placards included “System Change Not Climate Change”, and “We have...

A GROUP of faith organisations and charities is seeking legal guidance on whether charities should invest in companies that contribute to climate change.

The group has written open letters to both the Charity Commission and the Attorney General, calling on them to obtain a ruling from the Charity Tribunal on whether charities should ensure that their investments support their goals, and on their duty to provide public benefit.

The group points out that temperature rises above the UN target of 1.5°C “present substantial risks to the overall economy as well as to individual investment portfolios”, and may undermine the very aims that charities exist to achieve.

They warn that current charity investment law is outdated, and that there is a risk that trustees might misinterpret their duties. Currently, there is no regulatory requirement for charities to have a responsible investment policy.

The move follows recent controversies over high-profile charities’ holding investments which conflict with their aims. A ruling would affect £63 billion of philanthropic investments in the UK, and send a powerful signal to all institutional investors about how to align investment with the good of society.

The group includes the RSPB, the Joseph Rowntree Charitable Trust, Nesta, ClientEarth, the Ashden Trust, the Ecumenical Council for Corporate Responsibility, and Quakers in Britain.

The move has the backing of the former Archbishop of Canterbury Lord Williams, who said: “Investment policy has become a crucial area of moral debate at a time when we are at last recognising the urgency of issues around climate change. It is now of real importance that charity law should be clarified in a way that acknowledges the need to align investment practice with the imperatives of responsibility to and for our global environment.”

In the letter, the investors point out that, recently, several well-known organisations have been criticised for holding shares in companies whose activities conflict with their public statements and charitable aims. It reads: “There is a real risk that more charities will be subjected to this level of public scrutiny, and stories of this kind will continue to damage public trust and confidence in charities and draw accusations of hypocrisy and inconsistency.”

The current Charity Commission guidance is based on a 1991 legal challenge brought by the then Bishop of Oxford, the Rt Revd Richard Harries, before climate change had become a recognised public-policy issue and before charities were questioned over investments in businesses such as those with carbon-intensive activities, offering payday loans, or selling high-sugar foods to children.

Bishop Harries argued that the Church Commissioners concentrated on financial considerations over promoting the Christian faith. Although his challenge failed, the judgment contained some guidance for charity trustees on ethical investments, but suggested that such cases were exceptional.

The letter observes: “It seems highly likely that, if a court were to consider the question of conflict with objects today, that a range of other forms of conflict would now be relevant and, in the light of climate change and the comprehensive nature of it, the potential for conflict now seems far from exceptional.

“It is profoundly unsatisfactory for charity trustees not to know where the line is drawn in terms of legality or how to approach this line in terms of what form of evidence or advice needs to be taken into account when developing investment strategy.

“We believe that a tribunal would conclude that charity trustees are in fact prohibited from making investments which directly conflict with their charitable objects.”

Forthcoming Events

21-22 February 2020
Church Times Festival of Faith and Literature
For 2020 the Bloxham festival celebrates ‘The Power of Love’. Book tickets

26 March 2020
Theology Slam Live Final
Theology Slam is back, continuing its search for the most engaging young voices on theology and the contemporary world. Find out more

Welcome to the Church Times

​To explore the Church Times website fully, please sign in or subscribe.

Non-subscribers can read five articles for free each month. (You will need to register.)