Leading British charities and faith groups called on the government on Monday to review the law governing their investments to ensure they are ethically sound and do not contribute to climate change.
In an open letter to the government, a group of about 19 British charities and faith groups said they needed specific legal guidance on whether charities should invest in companies that contribute to 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,' Rowan Williams, a former archbishop of Canterbury said in a statement.
The signatories, which include the Joseph Rowntree Charitable Trust, the Ecumenical Council for Corporate Responsibility and Quakers in Britain, called for a legal ruling on whether charity trustees have a duty to ensure their investments support their aims and benefit society.
Investments are crucial for charities to bolster their finances but there is no regulatory requirement in Britain for them to have a responsible investment policy.
Case law on the issue is outdated and public opinion is changing amid growing awareness about the dangers of climate change, a draft of the letter sent to media organizations said.
'There is some confusion amongst charity trustees about how they marry their responsibilities to benefit the public and their objects and their responsibility to achieve financial returns,' said Sian Ferguson, trust executive for three Sainsbury Family Charitable Trusts, a signatory of the letter.
British charities invested £92 billion in the 2015/16 financial year, up from £81 billion the previous year, according to the National Council for Voluntary Organisations, the body that represents the sector and has backed the campaign.
These investments have come under increasing scrutiny amid a growing movement within the asset management industry to look beyond purely financial returns and consider the wider environmental and social impact of their investments.
For some investors, a more ethical approach might mean moving their money out of companies and funds they deem unethical, or actively engaging as a shareholder to change these companies from within.
A 2018 report by Arabella Advisors said investors with $6.2 trillion in assets under management have committed to divest from fossil fuels, up from $5.2 trillion in the previous report in 2016.
British conservation charity the National Trust came under fire last year for investing in a fund with holdings in fossil fuel companies, despite warning of the dangers of climate change.
The Church of England, a registered charity, invested in the now defunct payday lender Wonga through a fund, having previously criticised the company.
'It is as if the sector has been sleepwalking a little bit around these issues,' said Luke Fletcher, partner at specialist law firm Bates Wells Braithwaite, which drafted the letter.
'Generally the public hold charities to a very high standard and expects a great deal from them ... Our view would be that the law and practice is somewhere out of step with public opinion.'
