Judgment was handed down on a significant case regarding the duties of trustees in relation to investment policies last week. 

The issue before the court concerned the duties of charity trustees’ when exercising their powers of investment. In particular, the claimants in the case, the Ashden Trust and the Mark Leonard Trust sought clarity on the relationship between investments and charitable purposes. The charitable purposes of the Trusts were environmental protection and improvement and the relief of poverty respectively. 

The Trusts each wanted to adopt an ethical investment policy to avoid making potentially-profitable investments which, they considered, would conflict with their charitable purposes. Their proposed policy criteria for an investment would be whether or not it was in accordance with the principles of the Paris Climate Agreement of April 2016. 

In short therefore, the claimants were seeking the approval for investment policies that would exclude as far as possible, investments that were not aligned with the goals of the Paris Agreement. 

The judgment handed down in Butler-Sloss and Ors v The Charity Commission for England and Wales and Anor [2022] EWHC 974 (Ch) ruled that if trustees hold a reasonable view that particular investments would potentially conflict with their trust’s charitable purposes, they have the discretion to not to make them, despite that the primary duty of trustees is to further the purposes of the trust and they would normally be expected to maximise their trust’s investments. 

The principles confirmed in the judgment can now be applied immediately by all charity trustees when considering their investments and the principles take priority over Charity Commission guidance on the matter.