English Law Commission Report on Fiduciary Duties of Investment Intermediaries

The English Law Commission has released a report on Fiduciary Duties of Investment Intermediaries:

"In this report we have considered the question of long-term investment with particular reference to pensions, where liabilities will typically be incurred over a long period (...)"

"We conclude that trustees should take into account factors which are financially material to the performance of an investment. Where trustees think ethical or environmental, social or governance (ESG) issues are financially material they should take them into account."

"We also conclude that, 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 law permits trustees to make investment decisions that are based on non-financial factors, provided that:

• they have good reason to think that scheme members share the concern, and
• there is no risk of significant financial detriment to the fund."