ShareAction today welcomed the PRI’s report “Fiduciary Duty in the 21st Century”. ShareAction has long stressed the need for greater clarity on the extent and nature of fiduciary duties in the investment sector and was pleased to contribute to the report as an interviewee and peer reviewer.
ShareAction says PRI (UN-backed Principles of Responsible Investment) is right to seek to end the debate about whether fiduciary duty is a legitimate barrier to investors integrating environmental, social and governance (ESG) issues into their processes. Fiduciary duty continues to be erroneously used by some pension funds to justify a barrier to savers’ money being invested in a long-term, responsible manner. The PRI’s report shows that this approach is wrong.
ShareAction agreed with the PRI that the past decade has seen significant progress on investors recognising the importance of ESG factors and that it is no longer considered radical to argue that these factors can be material.
However, in ShareAction’s experience, there is still nervousness amongst some trustees and advisers in the pensions industry about taking ESG factors into account. In order to break down these remaining barriers, ShareAction believes that there needs to be proper clarification in law of the nature of pension trustees’ fiduciary duties. ShareAction also supports the PRI’s call for the development of an international statement or agreement on the duties that fiduciaries have to their beneficiaries.
Catherine Howarth, Chief Executive at ShareAction, says: “The PRI’s report is a positive call to action for those in the pensions and investment industry who continue to hide behind fiduciary duty as an excuse to not take environmental, social and governance factors into account. This outdated stance is unsustainable and unacceptable for those investing savers’ hard-earned money. We cannot wait another decade for these laggards to catch up and in order to spur them on, proper statutory clarification of trustees’ duties is needed.”