There should be stronger encouragement for charities to consider the environment and actively pursue responsible investment policies, a peer said in parliament last week.
Baroness Hayman, a crossbench peer, was speaking during the Charities Bill debate last week, when she brought up responsible investment and argued for more rules encouraging charities to support environmental goals.
The Charity Commission recently consulted on its guidance and published new draft guidance, which Hayman criticised for giving charities too much leeway.
“I fear that this could be interpreted as an invitation not even to consider whether responsible investment is the right thing to do,” she said.
She urged the government to “consider how the role and remit of the Charity Commission aligns with the UK’s net-zero and biodiversity goals”.
At the moment there is “no mention of sustainability” in the Commission’s statutory remit, which Hayman said is “at odds” with other parts of government policy.
She reminded peers that government policy is for “all sections of society should be involved in our statutory and international obligations and support the UK’s transition to a net-zero, nature positive economy”.
She added: “I have to ask whether the Charity Commission should play a part in this and encourage charities to do so themselves.”
Hayman also said the Climate Change Committee has emphasised that all policy should be joined up across government, and argued: “Charities and their regulator should not be exempt from this.”
She said she was not expecting changes to this bill, but raised the possibility of returning to the topic in the future.
She said: “This is not the bill to make major changes to the Commission’s functions, although perhaps in future we could look at how we could insert a responsibility for it to align with climate change goals in statute.”
Legal action ‘deplorable’
However, Viscount Chandos, a Labour peer and trustee of the Esmee Fairbairn Foundation, disagreed with Hayman, arguing that it should be up to trustees to make decisions about their charity.
Regarding the Commission’s consultation, he said: “A permissive and clarificatory outcome would be helpful, but a prescriptive one would be unhelpful.”
Chandos said he also objected to the legal route that some trusts have taken. Two trusts been granted permission for a High Court to ruling on whether charities must align their investments with their charitable objects.
“I deplore the legal action being taken by a number of trusts and foundations to try to make it legally required for trusts and foundations to invest in line with their mission. It should be left to the trustees of each of those foundations to judge the extremely complex issues around that,” he said.
Prescriptive rules would be particularly difficult for foundations with a wide range of objectives, he added, which could “make it almost impossible” for some to “invest without sacrificing a significant financial return, from which the trust or foundation’s grantmaking activities are derived”.
The Commission is planning to publish a summary of the responses to its draft guidance later this summer, but is not expected to finalise its guidance until after the court decision.
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