Investors get fiduciary duty wrong and the climate suffers

Another investor, Natasha Landell-Mills of Sarasin and Partners, reinforces the case for better stewardship in yesterday’s FT. (Asset managers must use their votes to tackle climate change)

She asks why so many fund managers won’t vote for change. Short-termism is the reason.

‘Too many fund managers believe climate change is unlikely to affect them over the next quarter or financial year where they are focused.’

Exactly

‘Some believe their fiduciary duty prevents them from acting’

And they are wrong!

In other words those fund managers are putting their own short term rankings and performance bonuses ahead of the long term interests of their clients in tackling and mitigating climate change.

Their duty is to deliver value for their clients: not to demand the harvest at Easter and leave their clients out of grain by the winter.

To correct this we need the whole investment chain to operate as a stewardship value chain. We describe how this can work in practice in Entrusted- stewardship for responsible wealth creation.

And we explain why responsible action by investors on climate change is an inevitable implication of their fiduciary duty.

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