Sarah Butler-Sloss (as trustee of the Ashden Trust) v The Charity Commission for England and Wales
| Jurisdiction | England & Wales |
| Judge | Mr Justice Michael Green |
| Judgment Date | 29 April 2022 |
| Neutral Citation | [2022] EWHC 974 (Ch) |
| Docket Number | Case No: PT-2021-000352 |
| Court | Chancery Division |
[2022] EWHC 974 (Ch)
THE HONOURABLE Mr Justice Michael Green
Case No: PT-2021-000352
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
PROPERTY, TRUSTS AND PROBATE LIST (CHD)
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
Edward Cumming QC and Maxim Cardew (instructed by Bates Wells & Braithwaite London LLP) for the Claimants
Ben Jaffey QC (instructed by Legal Services, the Charity Commission for England and Wales) for the First Defendant
William Henderson (instructed by Government Legal Department) for the Second Defendant
Hearing dates: 8, 9 and 10 March 2022
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HONOURABLE Mr Justice Michael Green
INTRODUCTION
Should charities, whose principal purposes are environmental protection and improvement and the relief of poverty, be able to adopt an investment policy that excludes many potential investments because the trustees consider that they conflict with their charitable purposes? One might be forgiven for thinking that the answer should obviously be that such a policy would be entirely appropriate. But because of uncertainty over the reach of the only leading case in this area – Harries v Church Commissioners for England [1992] 1 WLR 1241, a decision of Sir Donald Nicholls V-C, as he then was, (commonly referred to as the Bishop of Oxford case) – and the fact that this is a very important decision for them, the Claimants, who are the trustees of two such charities, seek the Court's blessing for the adoption of their new investment policies.
The two charities are the Ashden Trust and the Mark Leonard Trust. Both are part of the Sainsbury Family Charitable Trusts network. They have approximately £42m and £22m respectively by way of assets. The First Claimant, Ms Sarah Butler-Sloss, is the settlor and a trustee of the Ashden Trust; her brother, the Fifth Claimant, Mr Mark Sainsbury, is the settlor and a trustee of the Mark Leonard Trust. Both charities work closely together, having similar purposes and sharing staff and the same investment manager, Cazenove Capital Management ( Cazenove).
The application is brought principally under what is known as Category 2 within the four categories described in Public Trustee v Cooper [2001] WTLR 901 ( Public Trustee v Cooper). The Claimants, who are all the trustees of the two charities, seek the court's approval for the adoption of their proposed new investment policies to ensure that they are acting lawfully in such respect. They also seek a series of declarations as to the proper approach to be taken in relation to such issues generally by charity trustees. I will deal with whether that is appropriate relief to be seeking from the Court later in this judgment. On 14 April 2021, I gave permission to the Claimants to bring these proceedings pursuant to s.115(5) of the Charities Act 2011 because I considered that the Charity Commission had refused permission.
The Defendants are the Charity Commission for England and Wales and the Attorney General, each of whom are separately represented. Both invite the Court to deliver a judgment that sets out the correct approach in law for charity trustees to follow in considering adopting an ethical or responsible investment policy but say that it is premature for the Court to approve these investment policies based on the available evidence. Everyone recognises that there needs to be clarification as to the effect of the Bishop of Oxford case, and I will endeavour to provide that, but it is important not to lose sight of the fact that this is a specific application by these charities in relation to their proposed new investment policies and I will be determining the issues before me in that context.
I have been greatly assisted by the written and oral submissions by Counsel and their legal teams. Mr Edward Cumming QC with Mr Maxim Cardew appeared on behalf of the Claimants; Mr Ben Jaffey QC appeared on behalf of the Charity Commission; and Mr William Henderson appeared on behalf of the Attorney General.
CONTEXT
The method that the Claimants have chosen for identifying the investments that the charities should invest in is whether they are aligned with the Paris Climate Agreement which was signed on 22 April 2016 under the United Nations Framework Convention on Climate Change (the Paris Agreement). There are 195 countries that are parties to the Paris Agreement, with 189 of them having ratified it. The principal goal of the Paris Agreement is to limit global warming to well below 2°C above pre-industrial levels, and pursuing efforts to limit it further to 1.5°C. It aims to do this by reducing greenhouse gas emissions and fostering climate resilience and sustainable development. Paragraph 1(c) of Article 2 to the Paris Agreement is particularly pertinent as it states:
“(c) Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate resilient development”.
The signatories to the Paris Agreement asked the Intergovernmental Panel on Climate Change ( IPCC) to produce a special report as to the difference in effect of 2°C warming to 1.5°C warming. The IPCC published its report in October 2018. In relation to investments, the IPCC said that: “ Realizing the transformations towards a 1.5°C world would require a major shift in investment patterns… pursuing 1.5°C mitigation efforts requires a major reallocation of the investment portfolio, implying a financial system aligned to mitigation challenges” (para 2.5.2.2).
The challenges of tackling irreversible climate change are obvious and have been recognised by the UK Committee on Climate Change and Parliament which approved a motion on 1 May 2019 declaring an environmental and climate emergency.
After the hearing had finished Mr Jaffey QC brought to my attention a decision of the Administrative Court handed down on 15 March 2022 in R (Friends of the Earth) v. Secretary of State for International Trade/Export Credits Guarantee Department (UK Export Finance) and ors [2022] EWHC 568. In his judgment, Stuart-Smith LJ helpfully set out the framework of the Paris Agreement and its adoption and legal effect in domestic law (see [15] to [38]) and the meaning and extent of the obligation on the UK Government to comply with Article 2(1)(c) of the Paris Agreement (see [225] to [240]). It should be noted however that Thornton J disagreed with Stuart-Smith LJ, particularly over the assessment of Scope 3 emissions (see below) and therefore whether the UK Government had acted consistently with its Article 2(1)(c) obligations.
Whatever the UK Government's obligations under the Paris Agreement (and indeed all the other signatories' obligations), it is clear that private persons and charities are not bound as such to it. But the Claimants have decided that the goals of the Paris Agreement should be the appropriate basis for assessing whether their investments are consistent with their charitable purposes.
In the exercise of their power to invest, the Claimants want to ensure that the investments they make are not in conflict with the charities' purposes and to be able to pursue such a policy even if the financial returns may not be maximised as a result. As they see it, they wish to exclude investments, so far as practically possible, that are not aligned with the Paris Agreement. By that they mean that the total investment portfolio should ensure that its greenhouse gas emissions will overall be limited so as to comply with the target of 1.5°C. Various guidelines for assessing whether individual investments are acceptable or have to be excluded are set out in their proposed investment policies.
THE CHARITIES
Both charities were established by trust deeds: the Ashden Trust Deed is dated 27 November 1989; and the Mark Leonard Trust Deed is dated 14 July 1994. The Trust Deeds both provided for general charitable purposes.
The trustees of the Ashden Trust have determined principally to pursue the statutory charitable purposes of: environmental protection or improvement; the prevention or relief of poverty; and the relief of those in need, by reason of youth, age, ill-health, disability, financial hardship or other disadvantage. It pursues its charitable purposes principally through grant-making in four categories: the Climate Change Collaboration (an umbrella term for joint grant making by three Sainsburys trusts); Sustainable Farming; Avoiding Deforestation; and Connecting People with Nature. During the 2019/2020 financial year, the Ashden Trust approved nearly £1.8m of grants.
The trustees of the Mark Leonard Trust have determined principally to pursue the charitable purposes of: environmental protection or improvement; and the relief of those in need. Like the Ashden Trust, it does this primarily through grant-making. During the 2018/2019 financial year, the trustees approved grants totalling just under £1.5m.
The Trust Deeds contain...
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