Fiduciary Duty in the 21st Century
This report is based on an analysis of investment practice and fiduciary duty in eight countries: Australia, Brazil, Canada, Germany, Japan, South Africa, the UK and the US. It is based on interviews, roundtables and webinars with asset owners, investment managers, lawyers and regulators and a comprehensive review of law and policy on fiduciary duty.
The purpose of this report is to end the debate about whether fiduciary duty is a legitimate barrier to investors integrating environmental, social and governance (ESG) issues into their investment processes.
Its precursor, a 2005 report commissioned by UNEP FI from law firm Freshfields Bruckhaus Deringer concluded that integrating ESG considerations into investment analysis is “clearly permissible and
is arguably required.”In the decade that followed , many asset owners have made commitments to responsible investment. Many countries have introduced regulations and codes requiring institutional investors to take account of ESG issues in their investment decision-making.
These changes – in investment practice and in public policy demonstrate that, far from being a barrier, there are positive duties on investors to integrate ESG issues.
This report argues that failing to consider long-term investment value drivers, which include environmental, social and governance issues, in investment practice is a failure of fiduciary duty.
Related Inquiry Publications
- The Case for Investor Engagement in Public Policy
- Lenders and Investors Environmental Liability
- The Financial System We Need: Aligning the Financial System with Sustainable Development
- 4th Update Report: The Coming Financial Climate
- Shifting Perceptions: ESG, Credit Risk and Ratings – part 1: the State of Play