UKSIF calls for clarity on fiduciary duty

UKSIF calls for clarity on fiduciary duty

The UK Sustainable Investment and Finance Association (UKSIF) has co-ordinated a collective letter asking for statutory clarification on fiduciary duty regarding environmental, social and governance (ESG) and stewardship issues.

Showing wholehearted support for the Law Commission’s recommendations on fiduciary duty, published July 1, the letter goes a step further by asking for legal clarification from the UK government.

“We believe that statutory clarification… is still the most effective way to protect the public’s pensions and savings, and is a much stronger statement of the government’s commitment to long-term investment,” said Simon Howard, CEO of UKSIF.

“We therefore call upon to consider statutory clarification to provide pension trustees with the greatest possible confidence to consider the full range of investment approaches.”

The letter, addressed to Vince Cable, Secretary of State for Business and Steve Webb, Minister of State for Pensions, was signed by investors from organisations with more than £550bn ($940bn) in assets under management.

The letter follows the publishing of the Law Commission’s Consultation on Fiduciary Duties of Investment Intermediaries on July 1. The consultation said that poor governance, environmental degradation and poor treatment of customers, suppliers and employees are financially material risks to investors and savers.

“Whilst the pursuit of a financial return should be the predominant concern of pension trustees, the law is sufficiently flexible to allow other, subordinate, concerns to be taken into account,” the report said. “Where trustees think ESG issues are financially material they should take them into account.”

Signatories of the UKSIF-orchestrated letter urge the government to swiftly take up the Law Commission’s “tremendously useful” recommendations on ESG and stewardship issues.

“It is essential that the government gives absolute certainty to pension trustees that they can and should consider the full range of sustainable investment approaches necessary for the type of long-term decision-making that grows the value of beneficiaries’ assets,” said Howard.

The signatories included:

  • Simon Howard, CEO of UKSIF
  • Fouad Benseddik, director of methodology and institutional relationships at Vigeo Rating
  • Paul Ellis, CEO of Ecology Building Society
  • Katherine Garrett-Cox CBE, CEO of Alliance Trust
  • Peter Harrison, head of investments at Schroder Investment Management
  • Nick O’Donohoe, CEO of Big Society Capital
  • Ian Simm, CEO of Impax Asset Management
  • Steve Waygood, chief responsible investment officer of Aviva Investors
  • Danielle Walker Palmour, foundation director at Friends Provident Foundation
  • Peter Webster, CEO of EIRIS
  • Rob Wylie, chairman of WHEB Group

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