ESG and pensions: Fiduciary duties of trustees considered by Financial Markets Law Committee

This website will offer limited functionality in this browser. We only support the recent versions of major browsers like Chrome, Firefox, Safari, and Edge.
Written by Kate Granville Smith, Harrison Packer and Francesco Andres
One of the main duties of any pension scheme trustee are their fiduciary duties, which includes a duty of care when investing. But to what extent can trustees consider factors like sustainability and climate change whilst still complying with their fiduciary duties?
We know this is a question lots of trustees are considering. Helpfully, the Financial Markets Law Committee (FMLC) has released a short paper summarising the current legal position and some of the uncertainties, which is aimed directly at trustees and has been well-received by the industry.
This is a useful paper for trustees considering their investment strategy and looking to understand more about this topic. You can access the paper here, which sheds some light on the current debate. We would be happy to discuss further in the context of particular schemes:
Some of the report’s key points are:
This report is a very helpful contribution to the ongoing debate around whether pension scheme trustees should have clearer guidance (or legislation) outlining how ESG factors are to be considered in decision-making. The understanding and development of law in this area continues to be a hot topic, with the Work and Pensions Committee recently holding a session exploring trustees’ fiduciary duties in relation to pension investment decisions, and there is likely to be more on this subject in the coming months from industry and Government.
Burges Salmon are well placed to advise on all aspects of ESG in relation to pension schemes. If you would like to explore this topic further, please contact Kate Granville Smith.
"Sustainability and the subject of climate change are of importance to pension schemes generally, and beyond that to economies as a whole, and to the population at large. These are subjects that make particular demands in the consideration of risk and return over time."