Fiduciary responsibility – Legal and practical aspects of integrating environmental, social and governance issues into institutional investment

Published July 2009

Fiduciary responsibility – Legal and practical aspects of integrating environmental, social and governance issues into institutional investment

This report is a sequel to the UNEP FI Asset Management Working Group’s landmark 2005 “Freshfields Report” which, until now, has arguably been the single most effective document for promoting the integration of environmental, social and governance (ESG) issues into institutional investment. This 2009 follow-on report provides a legal roadmap for fiduciaries looking for concrete steps to operationalise their commitment to responsible investment. The report—termed “Fiduciary II”— has three main elements. The first is an exploration of the legal perspective on how best to operationalise the integration of ESG issues into the investment process, particularly with respect to investment mandates and investment management contracts. The second is an analysis of responses to a pioneering survey questionnaire sent by the AMWG to investment management consulting firms, covering ESG issues as they relate to various aspects of the investment management process, including legal language. The third is a literature review that focuses on practical developments on the integration of ESG issues into the investment process, providing insights into the extent to which institutional investors have adopted, and can adopt, longer-term and more sustainable investment approaches. In addition, the literature review covers legal developments on fiduciary duty and ESG issues since, and including, the Freshfields Report. The new UNEP FI report was released just a few days before the Principles for Responsible Investment (PRI) Annual Event in Sydney, Australia, which convened many of the world’s largest institutional investors and where the report’s findings were deliberated. Over 560 institutions from the global investment community, representing more than USD 18 trillion in assets, have now signed on to the PRI, an investor initiative in partnership with UNEP FI and the UN Global Compact. The PRI was launched in 2006 by then UN Secretary-General Kofi Annan and endorsed in 2007 by current UN Secretary-General Ban Ki-moon. Executive Summary Versions: Chinese, French, Portuguese, Spanish Media coverage
Press release
Published: 2009 | by: UNEP FI

Fiduciary responsibility – Legal and practical aspects of integrating environmental, social and governance issues into institutional investment (2.5 MB | 92 pages)