A legal framework for the consideration of sustainability impact in investor decision-making

Within the next decade, assessing and accounting for the sustainability impact of investment decision-making needs to be a core part of investment activity. Launched in January 2019, the new project, A Legal Framework for Impact, will support this transition.

Investors have a fiduciary duty to integrate financially material factors, including environmental, social and governance (ESG) factors. Meanwhile, the Paris Agreement and UN Sustainable Development Goals have ramped up investor awareness about global sustainability challenges. Investors are increasingly considering ‘impact duties’ – such as decarbonisation targets, commitments to quality of life, gender equality or integrating the impact of their investments on wider society.

The project seeks to understand and analyse how investors can manage dual duties (their fiduciary duty and sustainability impact duties) and what happens if they are in conflict.

While there are emerging ‘pockets of excellence’ in technical understanding, including methodologies and disclosure requirements on the integration of impact in investment decision-making, fundamental legal questions remain:

  • Are there legal impediments to investors adopting ‘impact targets’—for example—that an investor’s investment activity is consistent with no more than 1.5 degrees of warming?
  • Are investors legally required to integrate the sustainability impacts of their investment activity in their decision-making processes?
  • On what positive legal grounds could or should investors integrate the realisation of the SDGs in their investment decision-making?

In October 2019, UNEP FI and the PRI appointed the leading law firm Freshfields to analyse whether and how legal frameworks allow for investors to consider sustainability impact across 11 jurisdictions: the EU, Australia, Brazil, Canada, China, France, Japan, South Africa, the Netherlands, United Kingdom and the United States. The project reference group of experts will also support testing the legal analysis.

The research will provide recommendations for policy change where legal analysis determines that legal impediments are restrictive for investors seeking to incorporate sustainability impact in their investment decision-making. It will also support wider implementation of the recommendations through investor and policy-maker outreach.

Download the project document here.

Project Timeline

Reference Group

Clara Barby, Chief Executive, Impact Management Project; Bridges Fund Management

Joanne Etherton, Lawyer, ClientEarth

Gerard Fehrenbach, Attorney at Law | Senior Advisor Responsible Investment, PGGM Investments

Sean Gilbert, Director, Global Impact Investing Network

Daniel Jackson, Managing Director, Goldman Sachs Asset Management (GSAM)

Martin Jonasson, General Counsel, AP2

Ryan Klausing, Director, Legal Team, Generation Investment Management

Libby Klein, Trustee Director, Christian Super

Kong Wei, Partner, Zhong Lun Law Firm

Susan Mac Cormac, Partner, Morrison & Foerster

Tom Tayler, Senior Counsel, Aviva Investors

Tara Tilbury, Senior Counsel, RBC Global Asset Management (U.S.) Inc.

Michael Torrance, Chief Sustainability Officer, Associate General Counsel, Legal and Regulatory Compliance, BMO Financial Group

Margaret Wachenfeld, Managing Director, Themis Research; Senior Research Fellow, Institute for Human Rights and Business

Daniel Wiseman, Lawyer, ClientEarth


Please contact Elodie Feller (elodie.feller@un.org), Investment Programme Lead, UNEP FI, for any questions or inquiries.

UNEP FI’s work on A Legal Framework for Impact is undertaken collaboratively with the Principles for Responsible Investment (PRI), and The Generation Foundation, supported by legal expertise from Freshfields.