Fiduciary duties exist to ensure that those who manage other people’s money act in their beneficiaries’ interests, rather than serving their own interests. Decisions made by fiduciaries cascade down the investment chain affecting decision-making processes, ownership practices, and ultimately, the way in which companies are managed. Some institutional investors believed that environmental, social and governance (ESG) issues were not relevant to their portfolio value and were therefore not consistent with their fiduciary duties. This assumption is no longer supported.

Following the launch of the original report Fiduciary Duty in the 21st Century (2015), the Principles for Responsible Investment (PRI), the United Nations Environment Programme Finance Initiative (UNEP FI) and The Generation Foundation launched a four-year project to clarify investors’ obligations and duties in relation to the incorporation of ESG issues in investment practice and decision-making.

As the project’s 2019 final report demonstrates, there is extensive evidence showing the critical importance of incorporating ESG standards into regulatory conceptions of fiduciary duty. Investors who fail to incorporate ESG issues are failing their fiduciary duties and are increasingly likely to be subject to legal challenges.

Hear from governments, regulators, and investors around the world how they are supporting the updated conception of fiduciary duty.

The project set out to end the debate on whether fiduciary duty is a legitimate barrier to the integration of ESG issues in investment practice and decision-making. Additionally, it published roadmaps with recommendations to fully embed the consideration of ESG factors in the fiduciary duties of investors across ten capital markets. ​

Former US Vice President and Chairman of Generation Investment Management, Al Gore, introduces UNEP FI, the PRI and The Generation Foundation’s Fiduciary Duty in the 21st Century Programme, which seeks to update conceptions of fiduciary duty and in doing so create the conditions for a more sustainable global economy.

The project had three components:

  1. Working with investors, governments and intergovernmental organisations to develop and publish a Global Statement on Investors’ Obligations and Duties.
  2. Publishing and implementing roadmaps on the policy changes required to achieve full ESG integration in investment practices across eight countries (Australia, Brazil, Canada, Germany, Japan, South Africa, UK and US).
  3. Extending research into investor’s obligations and duties to six Asian markets: China, Hong Kong SAR, India, Malaysia, Singapore and South Korea.

The project concluded that modern fiduciary duties of investors require them to:

  • Incorporate financially material ESG factors into their investment decision-making, consistent with the time-frame of the obligation.
  • Understand and incorporate into their decision-making the sustainability preferences of beneficiaries/clients, regardless of whether these preferences are financially material.
  • Be active owners, encouraging high standards of ESG performance in the companies or other entities in which they are invested.
  • Support the stability and resilience of the financial system.
  • Disclose their investment approach in a clear and understandable manner, including how preferences are incorporated into the scheme’s investment approach.​

There are three main reasons why the fiduciary duties of loyalty and prudence require the incorporation of ESG issues:

  1. ESG incorporation is an investment norm.
  2. ESG issues are financially material.
  3. Policy and regulatory frameworks are changing to require ESG incorporation.

UNEP FI’s work on fiduciary duty was undertaken collaboratively with the Principles for Responsible Investment (PRI), and The Generation Foundation. For more information about the Fiduciary Duty project, please visit www.fiduciaryduty21.org.

The Next Frontier:

While the conceptual debate around whether ESG issues are a requirement of investor duties and obligations is now over, further work is required. As currently defined, the legal and regulatory frameworks within which investors operate require consideration of how ESG issues affect the investment decision, but not how the investment decision affects ESG issues. Changing this will be our next phase of work through the project A Legal Framework for Impact.

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22 November 2019 | London, 15:00 GMT

Fiduciary Duty in the 21st Century Final Report Launch – London

Join UNEP FI and the PRI for the London final report launch of the Fiduciary Duty in the 21st Century programme on Friday, November 22, at 1500 GMT, hosted by The Generation Foundation. The Fiduciary Duty in the 21st Century programme was launched in 2016 to end the debate on whether fiduciary duty is a legitimate barrier to the integration of environmental, social and governance (ESG) issues in investment practice and decision-making. Over the past four years, the programme has produced extensive evidence on the subject and has advocated for global policy reform to clarify fiduciaries’ duties to their beneficiaries.

21 October 2019 | New York City, 3pm-5pm

Fiduciary Duty in the 21st Century Final Report Launch, NYC

Join UNEP FI and the PRI to discuss the evolution to the modern interpretation of fiduciary duty, which includes the consideration of environmental, social and governance (ESG) issues - from a legal case to regulatory clarification.

28 March 2018 | Beijing, China

Beijing Report Launch | Investor Duties and ESG Integration in China 北京报告发布会:投资者责任与ESG整合

UNEP FI, the PRI, The Generation Foundation, and the International Institute of Green Finance (IIGF) invite you to the launch of the report on ‘Investor Duties and ESG Integration in China,’ hosted by BNP Paribas. The project team and key contributors will present the main findings and recommendations of the report on how clarifying the role of ESG integration in investor obligations and duties can contribute to achieving China’s long-term vision of balanced, inclusive and sustainable development.

8 December 2017 | Webinar

Webinar: EU consultation on investor duties regarding sustainability

UNEP FI  and the PRI will host a webinar on the European Commission’s public consultation on investor duties (fiduciary duties) and sustainability on Friday, 8 December at 10am GMT/11am CET. The consultation builds on the EU High Level Expert Group on Sustainable Finance’s interim report, which recommends greater clarification by the EU in this area.…

13 October 2017 | Beijing, China

Beijing Roundtable | Investor Obligations and Duties and ESG Integration

Roundtable on Investor Obligations and Duties and ESG Integration
北京圆桌会议:中国的投资者责任和义务以及ESG整合

The Principles for Responsible Investment (PRI), the United Nations Environment Programme Finance Initiative (UNEP FI) and The Generation Foundation invite you to an Expert Policy Roundtable on ‘Investor Obligations and Duties and ESG Integration,’ hosted by BNP Paribas. Building on the recent achievements of the national Green Finance initiative in China, this event aims to discuss the development of an investment and regulatory environment that promotes consideration of financially material environmental, social and governance (ESG) issues, consistent with investor obligations and duties.

11 October 2017 | Shanghai, China

Shanghai Roundtable | Investor Obligations and Duties and ESG Integration

Roundtable on Investor Obligations and Duties and ESG Integration
上海圆桌会议:中国的投资者责任和义务以及ESG整合

The Principles for Responsible Investment (PRI), the United Nations Environment Programme Finance Initiative (UNEP FI) and The Generation Foundation invite you to an Expert Policy Roundtable on ‘Investor Obligations and Duties and ESG Integration,’ hosted by BNP Paribas. Building on the recent achievements of the national Green Finance initiative in China, this event aims to discuss the development of an investment and regulatory environment that promotes consideration of financially material environmental, social and governance (ESG) issues, consistent with investor obligations and duties.

26 April 2017 | Tokyo, Japan

Fiduciary Duty Japan Roadmap Launch

The Fiduciary Duty in the 21st Century Japan Roadmap is to be launched by Mr. Takejiro Sueyoshi, Special Advisor to UN Environment Finance Initiative in the Asia Pacific Region at the RI Asia conference in Tokyo.

Fiduciary Duty in the 21st Century programme: Final Activity Report 2015-2019

This report summarises the research and outreach activities carried out under the Fiduciary Duty in the 21st Century programme, convened by UNEP FI and the PRI, with the generous financial support of The Generation Foundation. The final report on Fiduciary Duty in the 21st Century presents the conclusions of the 4-year research and detailed analysis…

Fiduciary Duty in the 21st Century Final Report

A new report from UNEP FI and the PRI launched in New York on Monday 21 October 2019 at an investor roundtable. This latest report, which affirms that fiduciary duty requires the incorporation of environmental, social and governance (ESG) issues into investment analysis and decision-making processes, is the final installment of the four-year Fiduciary Duty…

ESG data in China: recommendations for primary ESG indicators

    A new joint report by UNEP FI, PRI and SynTao Green Finance, launched in Shanghai on June 5, 2019, provides recommendations for China’s ESG disclosure framework, prepared by its financial regulators. This report is a follow-up from the Investor Duties and ESG Integration in China, and part of the Fiduciary Duty in the…

Aligning investors with sustainable finance: a focus on the OECD

UNEP FI, the PRI and The Generation Foundation have published a report focusing on the policy work of the Organisation for Economic Cooperation and Development (OECD) on sustainable finance and investment. This briefing makes recommendations to the OECD to align policy work on the financial sector with globally agreed sustainable development objectives, such as the…

Fiduciary Duty in the 21st Century: France Roadmap

In November 2018, United Nations Environment Programme Finance Initiative (UNEP FI), the Principles for Responsible Investment (PRI), and The Generation Foundation in collaboration with Finance for Tomorrow published the Fiduciary Duty in the 21st Century: France Roadmap. The roadmap sets out recommendations for the French market to build upon its leadership position and achieve further progress…

Fiduciary Duty in the 21st Century – Untangling Stakeholders for Broader Impact: ERISA Plans and ESG Incorporation

In September 2018, United Nations Environment Programme Finance Initiative (UNEP FI), the Principles for Responsible Investment (PRI), and The Generation Foundation in collaboration with Godeke Consulting released Untangling Stakeholders for Broader Impact: ERISA Plans and ESG Incorporation. This report explores the United States private sector retirement market that is regulated through the Employee Retirement Income Security Act of…

Fiduciary Duty in the 21st Century – Ireland Roadmap

In June 2018, United Nations Environment Programme Finance Initiative (UNEP FI), the Principles for Responsible Investment (PRI), and The Generation Foundation in collaboration with SIF Ireland, Ireland’s Sustainable and Responsible Investment Forum, released the Fiduciary Duty in the 21st Century Ireland Roadmap. The report provides clear recommendations on policy and market changes required to achieve full ESG integration into…

Fiduciary Duty in the 21st Century – Ohio Roadmap

In June 2018, The United Nations Environment Finance Initiative (UNEP FI), the Principles for Responsible Investment (PRI), and The Generation Foundation released the Fiduciary Duty in the 21st Century Ohio Roadmap. Ohio is often viewed as a microcosm of the United States due to its diverse regions and bellwether political landscape. Like the rest of the…

Fiduciary Duty in the 21st Century – Investor Duties and ESG Integration in China

In March 2018, The United Nations Environment Finance Initiative (UNEP FI), the Principles for Responsible Investment (PRI), The Generation Foundation, and the International Institute of Green Finance (IIGF) released Investor Duties and ESG Integration in China. Building on the recent achievements of the national Green Finance initiative in China, the report discusses the development of an…

Fiduciary Duty in the 21st Century – Progress Report

Fiduciary Duty in the 21st Century concluded in 2015 that there are positive duties to to integrate environmental, social and governance (ESG) factors in investment processes. This launched a project by UNEP FI, the Principles for Responsible Investment, and The Generation Foundation to end the debate around fiduciary duties and sustainability. Two years into the…

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