Report finds that failing to consider ESG issues in investment decisions is a failure of fiduciary duty
10 Sep 2015
The United Nations Environment Programme Finance Initiative (UNEP FI) has published a report that aims to end the debate surrounding environmental, social and governance (ESG) issues and fiduciary duty.
The report is based on an analysis of fiduciary duty and investment practices in eight countries - Australia, Brazil, Canada, Germany, Japan, South Africa, the UK and the US. The authors find that despite significant progress many investors are not yet considering ESG issues in their investment research and decision-making. The report examines the reasons why investors are not systematically integrating ESG as part of their fiduciary duty and finds that inconsistency in corporate reporting, including inadequate analysis of the financial materiality of ESG issues, is making it hard to assess investment implications. Among the practical practical actions proposed in the report is therefore also support for international harmonisation in this area.