Commission to clarify trustees’ investment guidance after High Court ruling

16 Nov 2022 News

By malp / Adobe

The Charity Commission has confirmed that it will reword its investment guidance for trustees in light of a recent High Court ruling.

Yesterday, the regulator shared an update on its plans to redesign CC14 guidance, with a redrafted version now expected to be published by next summer. 

But it said that following the outcome of the recent High Court Case (Butler-Sloss v Charity Commission), “charities can continue to rely on the legal position” in the current guidance “when making investment decisions”.

The judgment, handed down in April, approved the investment policies of two charitable trusts, the Ashden Trust and the Mark Leonard Trust, which were designed to be aligned to the goals of the Paris Agreement on climate change. 

Judgment does not ‘fundamentally alter’ existing principles 

The Commission welcomed the judgment, saying that it clarifies how existing legal principles should be interpreted by trustees but that it does not “fundamentally alter those principles”.

It confirmed that trustees can exclude financial investments that conflict with their charity's purposes. In addition, trustees have no obligation to make financial investments that solely aim to maximise financial returns.  

The Commission said in a statement: “We’re now progressing a wider redesign of CC14, which aims to ensure the guidance is easy to follow and enables charity trustees to better understand the law around making financial investments on behalf of their charity.

“The redesigned guidance will also incorporate an updated explanation of social investment, which is distinct from financial investment and is currently covered in separate guidance. Furthermore, we will ensure the redesigned guidance is accessible, with straightforward structuring and examples where helpful, and using terminology that is best able to convey trustees’ duties clearly in the current context.”

New guidance to ‘support trustees to exercise their wide discretion’

Paul Latham, director of communications and policy at the Commission, said: “As the world continues to work in Sharm El-Sheikh and elsewhere on measures to fight climate change, it’s clear that many charities are themselves discussing how, in delivering on their purposes, they can address their own environmental impact. This includes in how they invest.

“We’re pleased to confirm that work to redesign our investment guidance is progressing, drawing on our previous listening exercise and consultation and on the High Court’s helpful judgment. Our aim is to produce new guidance that supports trustees to exercise their wide discretion in their charity’s best interests, works well for the diverse sector we regulate, and stands the test of time. In the meantime, charities can continue to rely on the legal position in our published investment guidance.”

ACF: Responsible investing should be ‘expected’ and not ‘justified’

The Association of Charitable Foundations (ACF) welcomed the news of a wider redesign of CC14. 

It wrote in a statement: “ACF’s membership of over 440 foundations and grant-makers collectively hold assets of over £50bn. Based on discussions with our members, ACF stated in its response to the listening exercise that investment guidance should be framed around the notion that responsible investing is expected, rather than something to be justified.

“We look forward to working with our members and the Commission as the guidance is developed and tested.”


The Commission conducted a listening exercise in 2020 to better understand the barriers facing charities when making responsible investments.

At the time, it heard that the way responsible investment is outlined in the guidance “seems not give some trustees sufficient confidence and assurance that responsible investment is something they can consider, or that the Commission supports”. 

Some respondents also pointed out that the use of “jargon or inconsistent terminology makes it harder for trustees to understand, challenge or hold to account those advising them”. 

The Commission opened a consultation on potential changes to the guidance last year but paused it after the High Court granted permission to the Ashden Trust and the Mark Leonard Trust to take legal action to clarify the rights and responsibilities of trustees considering adopting a responsible investment policy.  

Editor's note: This article has been updated to clarify that the court case did not focus on social investment.

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