FINANCE NEWS: Law group calls for trustee freedom in ethical investment

Trustees should be given more extensive powers to invest ethically, the Charity Law Association (CLA) has said.

Currently ethical investment is limited as trustees have to justify their investment choice by the anticipated level of return.

In its response to the Strategy Unit's Private Action, Public Benefit report, the CLA describes the recommendations as "unhelpful".

The report argues that charities should be free to adopt a "broad ethical investment strategy" because ethical investment results in similar returns to conventional investment techniques.

But the CLA's submission said: "This leaves trustees in a very uncertain position. It is not always the case that an ethical investment strategy will produce a return no worse than that produced by an unethical one.

Over the past year or so, tobacco shares have outperformed other sectors.

"If ethical investment strategies are to be encouraged, it would help if the law gave trustees the power regardless of the need to change as the market alters."

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