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Do the Fiduciary Duties of Pension Funds Hinder Socially Responsible Investment?

journal contribution
posted on 2023-05-18, 01:15 authored by Benjamin RichardsonBenjamin Richardson
In recent years, pension funds and other institutional investors have begun to give more attention to the environmental and social behaviour of the companies in which they invest. A recent movement for socially responsible investment (SRI) seeks to exclude companies that pollute or ignore human rights, for example, and to champion those that behave ethically and responsibly. However, some confusion among investment decision makers persists about the extent to which their fiduciary duties to beneficiaries allow policies that may sacrifice financial returns for environmental or other philanthropic causes. This is compounded by the belief that they cannot secure the best returns in respect of their fiduciary obligations with current socially responsible companies. With reference to the main common law jurisdictions, this article critically examines whether the fiduciary duties of pension fund investors hinder SRI. Contrary to some commonly held beliefs, SRI can often sit comfortably with fiduciary duties to invest prudently. However, legal reforms to improve the climate for SRI would help, as evident by some recent initiatives in several jurisdictions

History

Publication title

Banking and Finance Law Review

Volume

22

Pagination

145-201

ISSN

0832-8722

Department/School

Faculty of Law

Publisher

Carswell

Place of publication

Canada

Repository Status

  • Restricted

Socio-economic Objectives

Community services not elsewhere classified

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