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There are two sets of eyes on charities’ investments

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Following the Harries case from 20 years ago, the public also have an expectation on what trustees should and shouldn’t be spending their money on, says Stephen Roberts.

In 1992, the Bishop of Oxford challenged the Church Commissioners over their investment policy (Harries v The Church Commissioners for England [1992] 1WLR 1241). In particular, he sought a declaration that the Church Commissioners, in exercising their investment powers, were obliged to have regard to the object of promoting the Christian faith and thus to apply ethical consideration to their choice of investment.

The vice-chancellor considering that case summed up the responsibilities of charities with regard to investment very succinctly, “Most charities need money; and the more of it there is available the more the trustees can seek to accomplish.

Thus the purposes of the charity are usually “best served by the trustees seeking to obtain therefrom the maximum return, whether by way of income or capital growth which is consistent with commercial prudence“.

However, he recognised that “in a minority of cases the position will not be so straightforward“. These were cases “when the objects of the charity are such that investments of a particular type would conflict with the aims of the charity”. Examples were cancer research charities and tobacco shares, trustees of temperance charities and brewery and distillery shares, and trustees of charities of the Society of Friends and shares in armaments companies.

Alienating support

The vice-chancellor also identified another category of case where trustees’ holdings of particular investments “might hamper a charity’s work by making potential recipients of aid unwilling to be helped because of the source of the charity’s money, or by alienating some of those who support the charity financially”.

The vice-chancellor made clear that the greater the risk of financial detriment the clearer the trustees needed to be of the advantages to the charity of the course of action they were adopting.

The case also made clear that trustees “must not use property held by them for investment purposes as a means for making moral statements at the expense of the charity of which they are trustees”.

This case was decided twenty two years ago. Have there been developments in the law since that time? There have certainly been no significant legal cases on the issue of ethical investment since that time. Accordingly, in terms of the obligations of charity trustees with regard to the process of ethical investment, this remains the leading case.

The case does state the issue of ethical investment in permissive terms. Trustees may invest on ethical lines in certain situations. The tone is that this will be comparatively rare. Trustees can make ethical investments if there is no financial detriment. That said, the Harries case certainly envisages situations in which ethical investment is an imperative not an option such as where investment will be in contradiction of their objects or where certain investments hamper the work of the charity.

Public perception

What may well have changed is the public perception of charities and what they should be doing. The Harries case envisaged that there would be rare cases when a charity depending on donations would need to avoid certain investments which were likely to alienate their donors. It may be that now there is more of an expectation from the public that ethical investment is a good thing and that they are more likely to support charities that take such an approach. Accordingly, charities dependant on public support are well advised to take very seriously the words of the vice-chancellor, “trustees will need to balance the difficulties they would encounter or likely financial loss they would sustain if they were to hold the investments against the risk of financial detriment if those investments were excluded from their portfolio“.

That this may now be a more common occurrence than before reflects the move towards encouraging more social responsibility generally. Thus, in the Companies Act 2006 there is a requirement on directors of companies, including charitable companies, in complying with their duties to have regard to “the impact of the company’s operations on the community and the environment” and “the desirability of the company maintaining a reputation for high standards of business conduct”.

Further, trustees can always take into account well-established ethical criteria, provided that trustees discharge their investment powers in accordance with their duties regarding diversification and suitability and there is no financial detriment to the income of the charity which arises from applying those criteria.

Stephen Roberts is head of legal policy and litigation at the Charity Commission. This article was first published in Solicitors Journal on March 31 2014 and is reproduced by kind permission (www.solicitorsjournal.com).

Photo: Andreas.’s via Flickr

Further reading:

Norway pension fund steps up ethical investment policy

Cambridge University’s ethical investment polices questioned after arrest of Ukrainian oligarch

Triodos demonstrates power of ethical finance

 83% of British women support ethical investment

Fiduciary duty: are your investment fit for the future?

Economy

How Going Green Can Save A Company Money

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going green can save company money
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What is going green?

Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.

The first step in going green

There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.

Making needed changes within the company

After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.

Reducing the common paper waste

paper waste

Shutterstock Licensed Photo – By Yury Zap

Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.

Make money by spreading the word

Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.

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Energy

5 Easy Things You Can Do to Make Your Home More Sustainable

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sustainable homes
Shutterstock Licensed Photot - By Diyana Dimitrova

Increasing your home’s energy efficiency is one of the smartest moves you can make as a homeowner. It will lower your bills, increase the resale value of your property, and help minimize our planet’s fast-approaching climate crisis. While major home retrofits can seem daunting, there are plenty of quick and cost-effective ways to start reducing your carbon footprint today. Here are five easy projects to make your home more sustainable.

1. Weather stripping

If you’re looking to make your home more energy efficient, an energy audit is a highly recommended first step. This will reveal where your home is lacking in regards to sustainability suggests the best plan of attack.

Some form of weather stripping is nearly always advised because it is so easy and inexpensive yet can yield such transformative results. The audit will provide information about air leaks which you can couple with your own knowledge of your home’s ventilation needs to develop a strategic plan.

Make sure you choose the appropriate type of weather stripping for each location in your home. Areas that receive a lot of wear and tear, like popular doorways, are best served by slightly more expensive vinyl or metal options. Immobile cracks or infrequently opened windows can be treated with inexpensive foams or caulking. Depending on the age and quality of your home, the resulting energy savings can be as much as 20 percent.

2. Programmable thermostats

Programmable thermostats

Shutterstock Licensed Photo – By Olivier Le Moal

Programmable thermostats have tremendous potential to save money and minimize unnecessary energy usage. About 45 percent of a home’s energy is earmarked for heating and cooling needs with a large fraction of that wasted on unoccupied spaces. Programmable thermostats can automatically lower the heat overnight or shut off the air conditioning when you go to work.

Every degree Fahrenheit you lower the thermostat equates to 1 percent less energy use, which amounts to considerable savings over the course of a year. When used correctly, programmable thermostats reduce heating and cooling bills by 10 to 30 percent. Of course, the same result can be achieved by manually adjusting your thermostats to coincide with your activities, just make sure you remember to do it!

3. Low-flow water hardware

With the current focus on carbon emissions and climate change, we typically equate environmental stability to lower energy use, but fresh water shortage is an equal threat. Installing low-flow hardware for toilets and showers, particularly in drought prone areas, is an inexpensive and easy way to cut water consumption by 50 percent and save as much as $145 per year.

Older toilets use up to 6 gallons of water per flush, the equivalent of an astounding 20.1 gallons per person each day. This makes them the biggest consumer of indoor water. New low-flow toilets are standardized at 1.6 gallons per flush and can save more than 20,000 gallons a year in a 4-member household.

Similarly, low-flow shower heads can decrease water consumption by 40 percent or more while also lowering water heating bills and reducing CO2 emissions. Unlike early versions, new low-flow models are equipped with excellent pressure technology so your shower will be no less satisfying.

4. Energy efficient light bulbs

An average household dedicates about 5 percent of its energy use to lighting, but this value is dropping thanks to new lighting technology. Incandescent bulbs are quickly becoming a thing of the past. These inefficient light sources give off 90 percent of their energy as heat which is not only impractical from a lighting standpoint, but also raises energy bills even further during hot weather.

New LED and compact fluorescent options are far more efficient and longer lasting. Though the upfront costs are higher, the long term environmental and financial benefits are well worth it. Energy efficient light bulbs use as much as 80 percent less energy than traditional incandescent and last 3 to 25 times longer producing savings of about $6 per year per bulb.

5. Installing solar panels

Adding solar panels may not be the easiest, or least expensive, sustainability upgrade for your home, but it will certainly have the greatest impact on both your energy bills and your environmental footprint. Installing solar panels can run about $15,000 – $20,000 upfront, though a number of government incentives are bringing these numbers down. Alternatively, panels can also be leased for a much lower initial investment.

Once operational, a solar system saves about $600 per year over the course of its 25 to 30-year lifespan, and this figure will grow as energy prices rise. Solar installations require little to no maintenance and increase the value of your home.

From an environmental standpoint, the average five-kilowatt residential system can reduce household CO2 emissions by 15,000 pounds every year. Using your solar system to power an electric vehicle is the ultimate sustainable solution serving to reduce total CO2 emissions by as much as 70%!

These days, being environmentally responsible is the hallmark of a good global citizen and it need not require major sacrifices in regards to your lifestyle or your wallet. In fact, increasing your home’s sustainability is apt to make your residence more livable and save you money in the long run. The five projects listed here are just a few of the easy ways to reduce both your environmental footprint and your energy bills. So, give one or more of them a try; with a small budget and a little know-how, there is no reason you can’t start today.

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