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. In addition, 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.

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?

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. To learn more, download the project document here.

Call to Contribute: Request for Proposal from law firm(s)

UNEP FI, the PRI, and The Generation Foundation seek a major law firm, or a proven partnership or network of law firms, to collaborate with to understand and analyse how or whether legal frameworks consider the management of sustainability impact by investors in major jurisdictions.

The project presents a unique opportunity to advance the global economy’s transition to a more sustainable model – one that is aligned with the global climate agenda, under the framework of the UN Sustainable Development Goals agreed by 165 countries and territories.

Read the Legal Impact Framework for Impact RfP here. Final proposals should be submitted per the RfP instructions by COB Friday 26th July.

Call to Contribute: Join the Reference Group

The project will form a Reference Group of experts from investment firms that have developed or are in the process of developing a strategy for the integration of sustainability impact considerations in their firm’s core strategy and investment decision-making.

The Reference Group will help support the research by sharing policy developments, questions, concerns and information on legal, regulatory and fiduciary implications of the management of sustainability impact in investment practice. The Reference Group will include international, senior policy, investment and/or legal professionals from a PRI and/or UNEP FI signatory organization who have the interest and ability to contribute and who are headquartered in the major jurisdictions (e.g. EU, US, UK, France) covered by the project.

If you are interested in becoming involved in the project and joining the Reference Group, please contact Elodie Feller (elodie.feller@un.org), Investment Programme Lead, UNEP FI.

Reference group members include:

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

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

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

Martin Jonasson, General Counsel, AP2

Ryan Klausing, Director, Legal Team, Generation Investment Management

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

Download the Legal Framework for Impact project document here.

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