Published October 2019
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 in the 21st Century programme.
The Fiduciary Duty in the 21st Century programme was launched in 2016. Over the past four years, the programme has produced extensive evidence showing the critical importance of incorporating ESG standards into regulatory conceptions of fiduciary duty. Through the programme, UNEP FI and the PRI have advocated for global policy reform to clarify fiduciaries’ duties to their beneficiaries.
The final report includes discussion of The origins of fiduciary duty, The new policy context, and Modern fiduciary duty. The report also provides detailed country-specific analysis of current policy and regulatory landscape and recommendations for reform in each leading global economy.
Today, the fiduciary duties of investors require them to:
- Incorporate environmental, social and governance (ESG) issues into investment analysis and decision-making processes, consistent with their investment time horizons.
- Encourage high standards of ESG performance in the companies or other entities in which they invest.
- Understand and incorporate beneficiaries’ and savers’ sustainability-related preferences.
- Report on how they have implemented these commitments.
While the conceptual debate around whether ESG issues are a requirement of investor duties and obligations is now over, the report identifies several areas where further work is required.
Download the full report here.
Learn more about the Fiduciary Duty in the 21st Century programme here.