Sarah Butler-Sloss (as trustee of the Ashden Trust) & Ors v The Charity Commission for England and Wales & Anor

Charity trustees have a primary duty to further the charity’s purposes. Financial return is normally the starting point for investment decisions, but trustees may exclude investments which potentially conflict with those purposes. They must reasonably balance the likelihood and seriousness of the conflict against the likelihood and seriousness of any financial detriment. Relevant considerations may include donor support, beneficiaries’ views and reputational damage. There is no absolute legal prohibition on investments directly conflicting with charitable purposes. Trustees must act honestly, reasonably, with due care and skill, and responsibly. If they adopt a reasonable and proportionate policy after considering relevant factors, the court will not substitute its own view. The court approved the proposed Paris-aligned investment policy under the Category 2 jurisdiction described in Public Trustee v Cooper.

The trustees of the Ashden Trust and the Mark Leonard Trust sought the court’s approval for proposed investment policies designed to align their portfolios with the goals of the Paris Agreement. The policies excluded or restricted investments connected with fossil fuels, deforestation, high-emission sectors and poor ESG performance.

The application was principally made under Category 2 of Public Trustee v Cooper, seeking the court’s blessing for a momentous decision within the trustees’ powers. The central issues were the proper interpretation of Harries v Church Commissioners for England, whether directly conflicting investments were legally prohibited, what financial and non-financial factors trustees had to balance, and whether the trustees had properly exercised their discretion.

1. Proper approach. The trustees’ overarching duty was to further the charitable purposes. Their investment powers derived from the trust deeds and the Trustee Act 2000. Normally, that duty was pursued by seeking the best financial return consistent with commercial prudence, while applying the statutory suitability and diversification criteria.
2. Conflicting investments. Where trustees reasonably considered that investments or classes of investments might conflict with the charitable purposes, they had a discretion whether to exclude them. They had to balance the likelihood and seriousness of the potential conflict against the likelihood and seriousness of the potential financial effect. They could consider loss of donor support, damage to reputation and effects on beneficiaries.
3. Harries. The court held that Harries v Church Commissioners for England did not establish an absolute prohibition on directly conflicting investments. Its general exposition was technically obiter, and the word should did not impose a statutory or mandatory test. The decision nevertheless deserved great respect. The financial effect remained an important factor, and trustees had to exercise good judgment rather than apply rigid categories or thresholds.
4. Moral considerations. Trustees had to exercise caution when relying on purely moral considerations because supporters and beneficiaries might hold differing legitimate views. The statutory supervision of moral obligations under section 106 of the Charities Act 2011 reinforced that constraint.
5. Application and relief. The trustees had responsibly investigated the environmental conflict, obtained specialist advice and considered the policy’s financial objectives and risks. The proposed policy retained a targeted long-term return and provided for regular performance monitoring. The balancing exercise was therefore sufficient, and the trustees had acted lawfully. The court declared that they were permitted to adopt the policy and that doing so would discharge their investment duties. The further granular declarations were unnecessary and inappropriate.

First-instance decision. No appellate history was stated in the judgment.