Gareth Jones: Climate change demands progress on mission-aligned investing

01 Apr 2019 Voices

There's disagreement on how to get there, but stronger rules on aligning charities' missions with their investments are overdue, says Gareth Jones.

Last month saw interesting news that a coalition of charities have called for clarification on whether they are legally required to align their investments with their mission.

This has implications for a range of causes, but their statement particularly highlights that case law has been overtaken by “a dramatic increase in the scientific evidence about the impacts of climate change”, a phenomenon that affects us all.

This is good timing. Not perhaps from an environmental perspective, where it might be argued that we should all have been doing much more decades ago, but at least from a journalistic perspective, as it coincides with Charity Finance’s annual special feature on responsible investment, where we dig into this issue and much more.

The coalition’s position is very much that they want charities to invest more ethically. The thrust of their case is laudable – that charities should consider the relationship between their investments and their objects, strategy and values.

However, there is a question mark about their expectation that the Charity Tribunal will prohibit charities from making investments which directly conflict with their objects – it would be a concern if charities were to be forced too far down the road of divesting when active ownership can be more effective in certain circumstances.

The Charity Commission also has some concerns. It says that while it is sympathetic to giving greater clarity to trustees on this issue, a referral to the Charity Tribunal will be costly, time consuming and have an uncertain outcome.

It argues that there are other options available to address this issue, though it has as yet declined to outline what those options are, so we will watch and wait for their proposals.

But given the concern the public has about what charities are investing in (as Comic Relief found in 2013 regarding its investments in arms and tobacco), there is clear value in charities, the regulator and legal advisers getting together to work out an effective way to take this agenda forward.

A more robust inducement for charities to align their investments with their mission would be very welcome. And it’s not just a matter of protecting the sector’s reputation – the future of the planet depends on us all taking action, and charities can play an important role in leading the way.

Gareth Jones is editor of Charity Finance magazine

Civil Society Media's Charity Finance Week takes place in October and this year the theme is Accounts and Accountability. Find out more about the events taking place.