There is no conflict between responsible investment and fiduciary duty

At the ESG USA 2011 conference, held in New York on 13 December, Rob Lake moderated the “PRI Debate” which sought to answer the question: What is holding ESG/Sustainability from becoming mainstream? In this video interview Mr. Lake suggests that, at least for US investors, it is a mistaken belief that fiduciary duty — the legal obligation “to concentrate first and foremost on financial return” — is almost mutually exclusive to responsible investment.

Nothing could be farther from the truth, he says. Successful, long-term investment institutions like pension funds have to consider the factors that affect value and performance over the long term. “That means it is absolutely relevant to your fiduciary duty to be very interested indeed in climate change, the social consequences of globalization, corporate governance and indeed the long-term functioning and health and stability of financial markets themselves,” says Lake, “and all these things are embraced by the concept of responsible investment.”

While EU and UK investors understand the word ‘sustainability’ as a value concept, says Lake,in the USit’s still necessary to “find the right language, and dispel some of the myths about what are seen as conflicts or inconsistencies between responsible investment and fiduciary duty.”

References

This video interview was recorded in New York City on December, 13, 2011 during the ESG USA 2011 Conference “Investing for a Sustainable Economy,” organized by the Responsible Investor in association with Bloomberg.

This article may be reproduced according to our terms of use with attribution (and link, if online) to www.tias.edu. To be cited as: “There is no conflict between responsible investment and fiduciary duty”, Rob Lake, www.tias.edu, January 13, 2012.

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Low-res video (mp4)
Audio transcript (mp3)