Charity Commission consults on draft guidance for responsible investments
Melanie May | 12 April 2021 | News
The Charity Commission is asking for views on newly published draft guidance for making responsible investments.
‘Responsible investments’ refers to financial investments that align with a charity’s mission and purpose. The regulator announced the review earlier this year, after an informal listening exercise found that the way responsible investment is outlined in its existing guidance does not give all trustees sufficient confidence that they can consider, or that the Commission supports, this approach to investment.
It has now published a draft of updated guidance and is asking charities and others to feed back on whether the changes are clear, and make the guidance easier to use. The consultation runs for six weeks until 20 May.
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Under the draft guidance trustees of all charities can decide whether or not to adopt a responsible investment approach that reflects the charity’s purposes and values, and not just focus on the financial return. The new draft explains that the rules applying to responsible investments are those that apply to all financial investments, including that trustees’ decisions must always be made in the best interests of the charity, and in line with its governing document. The guidance also highlights the slightly different rules that apply when charities invest permanent endowments.
Paul Latham, Director of Communications and Policy at the Charity Commission said:
“During the listening exercise we held last year, we learnt that many charities are interested in considering responsible investments but need more clarity around the regulatory position.
“We have worked hard to ensure our draft guidance is easy to understand and empowers trustees to make decisions that are right for their charity.
“I encourage trustees, charity staff, those involved in investment management, and anyone with an interest in how charities are run to take part in our consultation, to help ensure our final guidance is as clear and empowering as possible.”
The guidance is part of the Commission’s wider guidance on Charities and Investment Matters, which is not yet being updated. According to the Commission this is because it recognises an urgent need to first address concerns about the clarity of its existing guidance around responsible investments.
About Melanie May
Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via thepurplepim.com.