The 2025 Charity Governance Code: what it means for charity sustainability 

The new edition of the Charity Governance Code was published by a cross-sector steering group in November 2025. It marks a major overhaul of the sector's governance standards. 

Although the Governance Code is framed as a voluntary framework, it represents the official sector benchmark for good governance in England and Wales. Charity trustee boards will not be able to skim the Code, file it and move on. 

Above all, the explicit integration of environmental responsibility and digital governance into guidance for the first time is a big shift in basic expectations of good trusteeship.

This article looks at what the Code actually requires regarding sustainability and considers what it means in practice for organisations thinking seriously about their long-term resilience.

A new structure, with sustainability at its centre 

The 2025 Code has organised its guidance around eight core principles. There is one new principle in the code:  "Ethics and Culture". Environmental sustainability is woven into the principle rather than being treated as a separate operational concern. The implication is deliberate: how an organisation approaches its environmental impact is now framed as a question of values and ethical leadership, not just operational efficiency or cost management.

Another change from earlier editions of the Code is that the old "Decision-making, risk and control" principle has been split into two new ones: "Decision-making", covering how boards make and record effective decisions; and "Managing Resources and Risks", which looks at financial resilience, asset stewardship and the full range of operational and strategic risks. This separation gives a clear focus on both financial resilience and risk management. 

Ethics, culture, and the environment

One of the most important changes is the much bigger emphasis on environmental responsibility and its integration into the "Ethics and Culture" principle. Past editions of the code mentioned environmental considerations but didn't explicitly link them to good governance.

Now, trustees are expected to consider the environmental impact of their operations, supply chains, investment decisions, and the broader footprint of how the charity does its work. The code suggests that these considerations are now fundamental to the ethical framework guiding an organisation.

This means that a board that has no policies or discussions on their organisaiton's environmental impact is not just missing best practice: it is operating below the Code's definition of ethical leadership.

For charities that have already been taking sustainability seriously — developing environmental policies, reviewing their procurement, considering the carbon footprint of their buildings and operations — the Code confirms their direction of travel.

For charities that have treated sustainability as too expensive, or as a marketing exercise ("greenwashing") or left it to the operations team to manage, the new Code will force a rethink. The code says that boards of non-profit organisations should demonstrate that considerations of environmental sustainability are fully embedded in their thinking and decision making.

Managing resources and risks: buildings, assets, and climate

Within the eight principles, the principle on "Managing Resources and Risks" is where the Code's implications become most concrete for many charities. This principle requires trustees to understand the charity's assets, optimise how resources are used, and assess long-term sustainability — explicitly balancing risk-taking against the need to safeguard people and assets for the long term.

For charities that own or occupy buildings, the issue of climate change is increasingly important. Buildings and property are a major cost and are exposed to climate impacts and growing regulatory pressures related to addressing climate change. Surging energy costs, stricter environmental standards, the risk of flooding and extreme weather, and the increasing difficulty of insuring and maintaining ageing property are worrying operational concerns for many organisations.

The Charity Commission's own Charity Sector Risk Assessment 2025 — published shortly before the new Governance Code — identifies financial resilience as the primary risk facing the sector, and also flags new AI and cyber risks. Taken together, the two documents send a consistent message: the risk landscape has expanded, and boards must address the risks.

Practical responses to this agenda vary significantly by organisation. Some charities have already invested in energy efficiency measures such as insulation upgrades, LED lighting, solar panels and heat pumps. These are strategic long-term measures that can reduce costs and to reduce environmental impact. 

Other non-profits may be earlier in their thinking. Some organisations, especially community groups, just don't have the funds for environmental upgrades. For these organisations, it is worth watching out for potential funding for sustainability upgrades. For example, the Energy Resilience Fund, provided funding specifically to help charities reduce energy usage through capital measures. The £40m Ofgem energy projects funding is another. The Code makes the task of identifying and accessing funding streams a  board-level responsibility. It is no longer a task for finance or fundraising teams. 

Charities with historic buildings have a much greater challenge. The tension between protecting heritage and the need to improve energy performance and sustainability presents trustees with difficult strategic considerations. For example, installing solar panels on historic buildings is possible, but it does require working through rigorous planning and consent issues. The Code can't resolve those tensions, but it does indicate that these issues are matters for board-level attention.

Supply chains and procurement become a governance issue

One specific and practical implication of the 2025 Code is the expectation that boards consider the environmental impact of their supply chains and procurement decisions. This brings ethical procurement firmly within the scope of governance. Ethical procurement is no longer a matter of basic compliance, but part of how the organisation's values are expressed.

The page on Ethical procurement is currently one of the most-visited pages on this site -- suggesting that many organisations are actively considering this topic. The board or management committee of a non-profit should now be considering and monitoring the ethical dimensions and values which guide an organisation's purchasing. 

In practical terms, this means reviewing supplier relationships, updating procurement policies to reflect environmental considerations and building environmental standards into contract requirements. For charities with complex or international supply chains, this is a big programme of work - but most large organisations should have been working on these issues for some time. 

For smaller organisations, the starting point is simpler: understanding what environmental and ethical commitments their main suppliers commit to, and whether procurement decisions reflect the organisation's stated values.

Investment decisions: the divestment question

The Code's "Ethics and Culture" principle explicitly addresses investment decisions, asking trustees to consider whether investments are aligned with their charity's values. This connects directly to the debate about fossil fuel divestment,  which has been evolving since the landmark 2022 High Court ruling established that trustees have the discretion to exclude investments on non-financial ethical grounds.

The NCVO's Fuelling Positive Change campaign has been pressing for sector-wide divestment commitments, and the Code supports boards that want to align their investment policies with their environmental commitments. Trustees who have been unsure about whether they can or should prioritise ethical considerations in their investment decisions now have a steer: the Code expects them to consider it. 

The debates within the third sector will continue, including whether engagement is more effective than divestment and about the practical challenges facing smaller charities with very limited investments and resources. But the Code does highlight that this topic is a board-level responsibility.

A note on AI and digital governance

For the first time, the Code addresses digital governance and artificial intelligence. It encourages trustee boards to develop formal policies for AI use and to treat digital governance as a strategic concern. 

This is a major shift. While trustees are not expected to become technical experts, the code asks them to maintain a good understanding of digital risks and to ensure that appropriate safeguards are in place.

This is a fast-moving area, and expectations will continue to evolve. The Charity Commission's risk assessment also raised AI and cyber threats as emerging concerns. For most non-profit boards right now, an AI governance policy may just be a statement of intent acknowledging the opportunities and the risks. Putting the issue on the table is a first step - but the Code does indicate that developing a policy can't be deferred indefinitely.

What does the Code mean in practice?

Compliance with the Code is not a regulatory requirement. The Charity Commission is observing the Code's development but does not enforce it. The framework is voluntary. Its "apply or explain" approach means that charities are expected to either adopt the Code's principles or explain, in their annual report, what alternative approach they take and why.

In practice, this means that the Code's primary function is to increase transparency and accountability, not to add to legal obligations. However, funders, commissioners, philanthropies and the public are increasingly looking for evidence of good governance. A trustee board or managing committee that can't demonstrate that it has considered environmental sustainability as a fundamental ethical question is now operating below a key sector benchmark.

For charity and voluntary sector organisations that have already been working on these issues, the Code provides a framework for them to set out their actions. They can show how the Code's priorities echo their efforts, where gaps remain and how they are addressing these gaps. 

The sector has not always been good at making the case for sustainability as a governance issue rather than an operational one. The 2025 Charity Governance Code clearly makes that case. The organisations best placed to respond to it are those that already understand sustainability as a core part of how they fulfil their mission.

The Charity Governance Code can be downloaded from charitygovernancecode.org. 

The content here related to the Code's key themes is indexed under Governance & regulation, Finance & investment, Resilient buildings, and Risk & continuity.