Mixed response to Charity Commission responsible investment consultation

20 Aug 2021 News

Charities and finance experts have provided a mixed response to the Charity Commission’s consultation on responsible investment.

The Commission conducted a six-week consultation on new guidance for responsible investment, and published a summary of consultation responses on Wednesday.

The overwhelming majority of respondents said that they were confident adopting a responsible investment approach was “viable” for their charity, but some also raised doubts about the usefulness of the term, which is intended to replace previous references to ‘ethical investment’.

Others argued that the guide to responsible investment should not be separate from charities’ wider work on environmental, social and governance (ESG) issues.


Some responders welcomed the proposed change in terminology. The Commission said some respondents told them that “the word ‘responsible’ has strong positive connotations in the context of trusteeship. It implies good stewardship of charity assets”.

However, respondents who thought the term ‘responsible investment’ was unhelpful warned that it may cause confusion because it was not understood the same way by charities and investment managers.

These respondents told the Charity Commission that the concept of responsible investment should take into account ESG factors rather than just a charity’s purposes and values.

They recommended that the Commission explicitly included ESG factors in its responsible investment guidance. According to the Commission’s summary, this could “reassure guidance users that the Commission accepts that it is valid for all charity investors, particularly long-term investors, to factor for systemic risks, and that to do so is financially material in its own right”.

A “significant number” of respondents said that the term is unhelpful because it implies that other approaches are not socially responsible.


The Commission will not publish its guidance until a High Court case relating to responsible investment, brought by two charities, is concluded. That case is expected to be heard next year.

The consultation drew on more than 200 responses, including from 173 charities and 21 specialist advisors.

The Commission said that it had also engaged with the Association of Charitable Foundations (ACF), the Small Charities Coalition, HMRC and the Scottish Charity Regulator. 


In its evidence to the consultation, the ACF said that the guidance should make clear that responsible investment is “expected, rather than something to be justified”.

The ACF said: “Responsible investment should be a starting point for investment decisions, not an optional extra.

“It would make more sense that trustees should be required to justify investments that are not taking this approach. Regulation could also seek to encourage charities to make investments that take account of mission, values and purposes, and discourage investments that are contradictory.”

The EIRIS Foundation, a charity set up to promote responsible investment, criticised the draft guidance, saying that while it did not prohibit responsible investment it did little to encourage it.

The Charity Finance Summit returns on the 7 October. The 2021 programme has been developed in response to feedback and insight from sector experts, and will deliver the most up-to-date developments in key topic areas of VAT, tax, investment, risk and strategy, alongside long-awaited networking opportunities. View the programme and book online.


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