When you're acting as a trustee, deputy, or attorney, particularly in a lay capacity, you’re often making decisions that go far beyond numbers on a page. Managing someone else’s money is a serious responsibility, and the instinct is usually to stay cautious. But what if the person whose funds you’re managing had strong views about the environment, human rights, or corporate ethics? What if they’d never have invested in oil or tobacco, and wouldn’t want their estate to either? These scenarios are increasingly common. Whether managing a personal injury trust, acting under a lasting power of attorney (LPA), or appointed as a Court of Protection deputy, you may find yourself asking whether ESG (environmental, social and governance) factors can, or should, play a role. After all, your legal duty is to act in the person’s best financial interests. So, is there room for values? As the law evolves, the answer is: sometimes, yes. Courts and professional bodies are recognising that responsible investing isn’t necessarily at odds with fiduciary duty. Sustainability, risk management, and a person's known values may all factor into what makes an investment suitable. This article explores the legal landscape around ESG investing for trustees, and how those principles may also guide attorneys and deputies. It also considers practical steps to ensure that ethical investing, if appropriate, is done thoughtfully, lawfully, and in a way that protects both the person’s finances and their values. ESG and the role of Trustees Lay trustees are often appointed because they’re trusted: usually family members, friends, or professionals with a personal connection to the beneficiary. While advisers may offer guidance, the responsibility ultimately rests with them. For those managing funds on behalf of a child or someone who lacks capacity, the role feels deeply personal. Fortunately, the legal framework offers structure. In England and Wales, the Trustee Act 2000 sets out a duty of care, requiring trustees to ensure investments are suitable, diversified, and, under section 5, backed by proper advice unless inappropriate. So where does ESG fit in? Traditionally, courts viewed financial return as paramount. In Cowan v Scargill [1985], the court ruled that trustees must act in the beneficiaries’ best financial interests; even if it meant investing in sectors they personally disapproved of. That view, however, has evolved. In Harries v Church Commissioners [1992], the court accepted that ethical factors may be considered, provided they do not compromise financial performance. The Law Commission’s 2014 report went further, confirming that ESG considerations can be relevant where they impact risk or return; in other words, where they are financially material. This is particularly relevant in long-term trusts, such as: Personal injury trusts for young or incapacitated individuals; Bereavement or settlement trusts set up for minor children; Life interest trusts where the income beneficiary lacks capacity; Or even discretionary family trusts with vulnerable or partially incapacitated beneficiaries. In these cases, the beneficiary’s values; whether stated, known to family, or reflected in past choices, may be relevant. ESG-aligned investments are now mainstream, with many low-cost, diversified funds offering ethical screening or positive impact strategies without compromising returns. For trustees, the key isn’t to avoid ESG but to treat it like any other financial factor. If an ESG issue (like climate risk or poor governance) could affect long-term performance, ignoring it could itself be a breach of duty. What matters is making these decisions deliberately, and transparently. Deputies, Attorneys, and ESG – Can values survive incapacity? When acting as a deputy or attorney under a financial LPA, the role is often approached with caution. You're managing money for someone who can no longer do so, often leading to a default of low-risk, conservative choices. But caution isn’t the same as stagnation. Increasingly, the question arises: can ethical or ESG (environmental, social and governance) factors play a role? Under the Mental Capacity Act 2005 (MCA), deputies and attorneys must act in P’s best interests, but this isn’t limited to financial gain. The Act also requires consideration of P’s known values and beliefs, especially those held before capacity was lost. If P avoided certain industries, donated to ethical causes, or expressed strong views on sustainability, continuing to reflect those values in investment decisions may be appropriate. In the case of LPAs, this conversation ideally starts early. The LPA form includes a “preferences” section, and it is wise to encourage donors to record any ESG views explicitly at the time of drafting. A simple statement like “I do not wish my funds to be invested in companies whose practices harm the environment or violate human rights” gives attorneys a clear mandate and protection when making value-aligned decisions in future. But even in the absence of written guidance, attorneys and deputies can still look back to understand what mattered to P: Did they avoid investing in certain industries? Were they regular donors to charities or political causes? Did they express clear views about climate change, social responsibility, or corporate ethics? Are there records of their financial decisions, or even informal statements to family or friends that can be evidenced? The MCA Code of Practice explicitly supports the consideration of this kind of personal history. Attorneys and deputies are not expected to guess, but they are expected to look, to listen, and to consider P’s broader life context when making decisions on their behalf. Of course, financial prudence remains essential. Any investment must still be: In P’s best financial interests; Suitable for their needs and expected future care costs; Appropriately diversified to manage risk. ESG and ethical investing are no longer fringe strategies. Many mainstream funds now include ESG criteria without sacrificing returns, and factors like climate risk or governance are increasingly seen as part of sound risk management. If P’s values are known, reflecting them may support the best interests test. Where they aren’t, caution is sensible but that doesn't mean ethical alignment must be ruled out. In the end, deputies and attorneys aren’t just managing assets, they’re continuing a person’s story. When done thoughtfully and transparently, ESG can form part of compassionate and responsible decision-making. The challenges The case for responsible investing is growing, but the path remains uncertain for trustees, deputies, and attorneys. Many want to reflect ethical values but fear straying into imprudence or personal liability. A core challenge is that ESG isn’t a fixed standard. It ranges from excluding harmful sectors to actively pursuing social impact, offering flexibility, but also confusion. Trustees may worry: What if I get it wrong? Without clear ESG provisions in the trust deed, diverging from conventional portfolios, however outdated, can feel risky. ESG may be more justifiable in long-term trusts where the beneficiary’s values are known, but thorough documentation is still essential. Deputies and attorneys face similar concerns. The MCA allows flexibility but demands transparency. If ESG funds underperform and the rationale isn’t clearly tied to P’s known values, the risk of challenge increases. At present, there’s no specific ESG guidance from the Court of Protection or the OPG. While trust and pensions law are evolving, deputyship and LPA frameworks lag behind. Many now call for updated guidance, arguing that, as with pension trustees, deputies and attorneys should be empowered (and supported) to consider ESG risks and opportunities. In the meantime, several safeguards can help: Seek professional investment advice, especially for larger portfolios. Document how values were identified - via LPA preferences, past spending patterns, or lifestyle choices. Link ESG to long-term goals - such as risk management or capital resilience. Review investment decisions regularly, just as with any financial plan. Ethical investing doesn’t mean abandoning financial responsibility. It means applying care, clarity, and knowing when to seek support. Aligning values and duty Trustees, deputies, and attorneys often carry an invisible weight: someone else’s life choices, values, and intentions, spoken or not. Nowhere is this more felt than in financial decision-making, where legal duty meets personal legacy. The idea that responsible investing conflicts with fiduciary duty is increasingly outdated. ESG, when approached carefully, can align with the duty to act prudently, invest wisely, and serve a person’s best interests. For trustees, this means recognising ESG as part of financial risk and return. For deputies and attorneys, it means acknowledging that best interests include P’s values, even if those now require thoughtful interpretation. The key is caution, not inaction. With good advice, clear records, and genuine intent, ESG-aligned investing can reflect not just legal compliance but enduring personal integrity. Until the law provides clearer guidance, those acting in fiduciary roles must navigate this evolving space with care. Done well, ethical investing honours not just duty but the imprint of a life once self-directed.
