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Responsible investment and charities—High Court provides clarity (Butler-Sloss v Charity Commission)

Published on: 20 May 2022
Published by: LexisPSL
  • Responsible investment and charities—High Court provides clarity (Butler-Sloss v Charity Commission)
  • What are the practical implications of this case?
  • What was the background?
  • What did the court decide?
  • Are there any potential wider implications for other types of trusts such as pension schemes?
  • Case details

Article summary

Private Client analysis: In Butler-Sloss v Charity Commission, the trustees of two charities with an environmental focus sought the court’s approval to adopt investment policies which excluded investments that are not aligned with the goals set out in the 2016 Paris Climate Agreement, on the basis that such investments would be in direct conflict with their charitable purposes. The High Court confirmed that, in these circumstances, charity trustees must balance all relevant factors, in particular the extent of the potential conflict against the risk of financial detriment. In this case, the trustees had performed the necessary balancing exercise properly and so would be permitted to adopt their proposed investment policies. This decision provides some clarification of the law on responsible investing by charity trustees and the extent to which they may allow their objects and wider moral considerations to influence their investment policy. Although the case concerns the implementation of a responsible investment policy by charities focused on environmental causes the decision has wider application. Written by Clare Wilson, senior knowledge lawyer at Macfarlanes LLP. or take a trial to read the full analysis.

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