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The voice of Scotland’s vibrant voluntary sector

Published by Scottish Council for Voluntary Organisations

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Charites can decide investments for themselves warns CAF

This news post is about 5 years old
 

Moves to restrict charities investing where they see fit would be counterproductive

Charites should be allowed to make their own ethical and moral judgements on investments, a leading body has warned.

It comes as a group led by Lord Williams of Oystermouth, the former Archbishop of Canterbury, called on the attorney-general to rule via a tribunal whether charities should invest in companies that contribute to climate change.

Climate change creates “substantial risks to the overall economy as well as to individual investment portfolios”, the group writes, and investing in some funds could undermine charities’ missions.

Lord Williams said: “Investment policy has become a crucial area of moral debate at a time when we are at last recognising the urgency of issues around climate change. It is now of real importance that charity law should be clarified in a way that acknowledges the need to align investment practice with the imperatives of responsibility to and for our global environment.”

However the Charities Aid Foundation, the ethical banking organisation, hit back by saying charities by law are given the responsibility for themselves to decide how and where to invest.

Chief executive Sir John Low said: “It is fundamental to our democracy that charities have the right to speak out and act to promote their chosen cause, whether that is by campaigning or by the ways they invest, which is why we’ve been making responsible investment options available to charities for many years.

“Official guidance already makes it clear that trustees can adopt responsible investment policies and have to justify their investment decisions but we do need to do more to ensure that these important issues are understood and applied more effectively.

“There are many powerful ways in which charities can use investments to further their mission and tackle issues like climate change, health, poverty, inequality and human rights so it is vital that they have the freedom to take a stand on the issues that are most important for their mission and the people they serve.”

Charity Commission guidance is based on laws dating from 1991 before climate change was recognised as a global problem and a public policy issue.

“We believe that a tribunal would conclude that charity trustees are in fact prohibited from making investments which directly conflict with their charitable objects,” the group said.