judgment

Butler-Sloss & Others v The Charity Commission for England And Wales & Another - judgment

<p>This entry was provided by the Sabin Center for Climate Change Law. Please see the terms of use for citation and licensing of third party data.</p>

Litigation

Sabin

Sabin Litigation

Butler-Sloss & Others v The Charity Commission for England And Wales & Another - Other

Filing Year For Action

This claim was brought by the trustees of two charities (the Ashden Trust and the Mark Leonard Trust; “the Claimants”), both of which have environmental protection or improvement as one of their main charitable purposes. The Claimants sought the Court’s approval to adopt an investment strategy that would, as far as practicably possible, exclude investments that did not align with the goals of the Paris Agreement under the UN Framework Convention on Climate Change (UNFCCC), which requires the 195 countries who are party to it to cut greenhouse gas emissions to tackle climate change. Though it is the nation signatories who must comply with the obligations, with private persons and charities not bound to it as such, the Claimants nonetheless chose the Paris Agreement as a benchmark with which to conclude that any investments that do not align with its goals are in direct conflict with their charitable purposes.

The Claimants were, however, concerned that adopting such an investment strategy would not be consistent with their fiduciary duties (and thereby be unlawful) as it would exclude many potential investments and may lead to financial detriment (if only in the short term). They therefore sought approval from the High Court to adopt this investment approach.

Their claim was defended by the Charity Commission and the Attorney-General. Though they supported the need for the court to clarify the effect of Harries v Church Commissioners for England [1991] 10 WLUK 372 (‘Bishop of Oxford’) and set out the correct approach in law for charity trustees, they argued that it was premature for the court to approve the claimants' investment policies based on the available evidence.

On April 29, 2022, the High Court gave judgment, with Green J approving the strategy and deciding that “the Claimants ha[d] exercised their powers of investment properly and lawfully” [Judgment at #88]. 

Green J set out ten legal principles that summarise the correct approach in law for charity trustees to follow when considering adopting an ethical approach to investment [Judgment at #78]. More specifically, he held that Bishop of Oxford did not lay down an absolute prohibition on making investments that directly conflict with the charity's purposes, and instead confirmed that, “where trustees are of the reasonable view that investments or classes of investment may conflict with the charitable purposes and thereby risk losing donors or damaging the reputation of the charity, the trustees have a discretion as to whether to exclude such investments” [Judgment at #78(6)]. That discretion should be exercised by reasonably balancing all relevant factors, including the extent of the potential conflict against the risk of financial detriment. Green J concluded that, “if that balancing exercise is properly done and a reasonable and proportionate investment policy is thereby adopted, the trustees will have complied with their legal duties” [Judgment at #78(10)]. In this case, Green J considered that the Claimants had sufficiently balanced these factors and so their proposed investment policy was lawful. Green J made the requested declaration that permits charity trustees to adopt a policy that aligns their charities’ investments with their charitable purposes, even though it may risk reducing financial returns.

On November 15, 2022, the government issued a formal response to the judgment and its implications for investment guidance. That confirmed the Charity Commission will publish updated guidance by summer 2023.

Butler-Sloss & Others v The Charity Commission for England And Wales & Another

The Climate Litigation Database

Find climate change litigation data and indicators for {text}.

{text} litigation

Sabin Center for Climate Change Law provides Climate Litigation Database, a comprehensive database of US and Global climate change caselaw

Quickly and easily search through the complete text of thousands of climate change law and policy documents from every country.

Search the Climate Litigation Database

An aim to achieve a quantifiable outcome within a given time-frame, set by an institution such as a national government.

Policy instruments are techniques or tools used by governing authorities to promote certain policies in order to achieve predetermined goals. Put simply, instruments are how a government tries to achieve its goals, with this taxonomy being focused on national policy instruments.

Risk is the potential for adverse consequences resulting from the dynamic interplay between (climate-related) hazards, exposure, and vulnerability of affected human or ecological systems.

Groups  of people who are adversely affected by climate change or the response to it

A set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy.

Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

Fossil fuel is a generic term for non-renewable energy sources such as coal, fossil gas, and oil (including crude oil, and petroleum products), that can be used for electricity and heat generation. Fossil fuels are hydrocarbons formed from pressurised and heated organic material buried over millions of years.

Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

Area of the economy in which actors engage in identical or related activities.

In human systems, the process of adjustment to actual or expected climate change and its effects, in order to moderate harm, increase resilience or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate change and its effects; human intervention may facilitate adjustment to expected climate change and its effects.

The management and allocation of funds, assets and investments to meet various objectives

This sector involves the wholesale and retail selling of goods.

Terrestrial means "of the earth" and relates to the risks to ecological system that includes all living organisms and their interactions within land-based environments, such as forests, grasslands, and deserts.

Any compulsory, unrequited payment to the government levied on corporations or individuals. This can be for environmental reasons, such as introducing a Carbon tax to set a price that emitters must pay for the greenhouse gases they emit.

This sector includes firms and individuals offering specialised expertise in fields such as law, accounting, consulting, science and engineering.

Activities involving the catching, processing, and selling of fish for food, recreation, and industry.

Direct investments by the governments using public funds. This can be to support climate initiatives or integrate climate into other projects.

Activities of businesses and institutions that provide financial services and products to individuals and organisations.

Activities of industries that extract natural resources, such as mining, oil, and gas, for commercial use.

The release of heat-trapping gases, primarily from human activities such as burning fossil fuels, agriculture and industry.

People who are less able to respond to the effects of climate change due to having limited financial or physical assets

Slow onset events evolve gradually from incremental changes over many years or from increased frequency or intensity of recurring events. As defined in the Cancun Adaptation Framework (2010), slow onset events include risks and impacts from rising temperatures, desertification, biodiversity loss, land and forest degradation, glacial retreat, ocean acidification, sea level rise, and salinization.

A target to reduce the prevalence of a greenhouse gas over a specific time frame

Activities that involve the cultivation of crops and raising of livestock for food, fibre, and other products essential for human life and industry.

Coal is a combustible sedimentary rock formed from carbonised plant matter, rich in carbon and hydrocarbons, and occurring in several main types including hard coal and brown coal.

Either money or something of monetary value is transferred between two or more organisations, people or countries.

Conditions that enhance the feasibility of adaptation options. Enabling conditions include finance, technological innovation, strengthening policy instruments, institutional capacity, multi-level governance and changes in human behaviour and lifestyles.

Climate change impacts our society by disrupting the natural, economic and social systems we depend on. Physical hazards and underlying vulnerabilities can lead to increased resource competition for food and water, which can heighten the risk of conflict.

A loan is a policy instrument where funds are provided to a borrower with the expectation of repaying the principal plus interest.

An agency providing government-backed financing, guarantees, and insurance to support domestic companies' international exports, that can play a role in financing climate-related projects.

People whose health, both mental and physical, makes them more vulnerable to the effects of climate change

Butler-Sloss & Others v The Charity Commission for England And Wales & Another - judgment

Target

Policy instrument

Risk

Impacted group

Fossil fuel

Greenhouse gas

Economic sector

Adaptation/resilience

Finance