The UK�s charities regulator has scrapped words such as �ethical� and �responsible� from its investment guidelines in a major overhaul designed to modernise its advice for non-profits. 

The Charity Commission has proposed �retiring� certain phrases that charities have said are too vague or not inclusive, as part of a wider revamp of its investment guidance. 

In a blog post outlining the changes, Paul Latham, director of communications and policy at the Charity Commission, said: �The new draft guidance instead emphasises that trustees must ensure that, ultimately, the investment approach operates for the benefit of their charity once they have considered all relevant matters. �

�In the context of financial investments, this may lead them to choose to exclude certain investments due to non-financial considerations, or to solely focus on financial return that maximises investment income to spend on their charity�s purpose.��

The changes to the investment guidelines also serve to bring the commission�s policies in line with a recent legal ruling, known as the Butler-Sloss judgement. In this case, the UK�s High Court ruled in favour of the trustees of two charities that had excluded investments from their portfolios in order to align themselves with the Paris Agreement on climate change.�

Previous Charity Commission investment guidance was based on a much earlier case that had ruled that financial outcomes were more important than ethical considerations.�

Latham said the High Court�s ruling �offered welcome clarification of how existing legal principles should be interpreted by trustees in a modern context�. �

He added: �It confirmed that trustees have wide discretion in making investment decisions, for example, in deciding to exclude certain investments based on non-financial considerations.  

�It also confirms trustees can equally choose to focus just on financial return � ultimately what is appropriate for charities may differ. We have ensured that our updated guidance reflects that judgment.��

The Charity Commission will be testing its new guidance with charities over the next few weeks with a view to publishing finalised guidance later this year.�