Jurisdiction(s):
United Kingdom

Key definition

Ethical investment definition

What does Ethical investment mean? In legal practice, ethical investment describes choosing or excluding investments by reference to non‑financial criteria—such as ethical, religious, environmental or social concerns—alongside conventional risk/return analysis. It is a descriptive term (often overlapping with “ESG” and “socially responsible investment”), not generally defined in UK or Irish legislation, though related concepts appear in pensions regulation and charity guidance. Key legal features focus on fiduciary duties. Trustees and other fiduciaries considers ethical factors where they are financially material, and may adopt non‑financial exclusions or preferences only consistently with duties to act for proper purposes and in beneficiaries’ best interests. For charities, case law...

Charity trustees and ethical investment: legal framework from Bishop of Oxford to Butler-Sloss and 2023 Charity Commission guidance (England and Wales)

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Practice notes

Many charities seek to invest in ways that accord with their purposes, and public expectations have often driven a requirement for an ethical footing to Investments. Although trustees can frequently do so in principle, this may pose serious challenges under trust and Charity law where such choices do not deliver the strongest available return. This note outlines:

a short overview of Ethical investment;
the former position on charity trustees adopting an ethical investment policy (still a key consideration); and
the updated position following the Butler-Sloss case.

What is an ethical investment?

The key question is what counts as an ‘ethical’ investment? Earlier guidance from the Charity Commission provided a broad and useful description: ethical investment is a wide term that encompasses many different approaches to investment strategy. An ethical policy may involve seeking companies that exemplify best practice in areas such as environmental protection, employment and human rights, or businesses whose activities contribute directly to a cleaner environment or a healthier society...

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Web page updated on 21/05/2026

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