UK Pension Trustees Embrace Sustainability in Investment Decisions
Pension trustees in the UK are increasingly considering sustainability and systemic risks in their investment decisions, aligning with their fiduciary duty and the need for economic transition. A recent legal opinion has supported this shift, while proposals are underway to further clarify trustees' powers in this area.
Traditionally, pension trustees have been obligated to act in the best interests of their beneficiaries, a duty known as 'fiduciary duty'. However, this concept has evolved over centuries and is now seen as flexible enough to accommodate sustainability considerations.
Some pension trusts are already investing according to the highest ESG standards, recognizing that the current economic system relies on unsustainable foundations. These trustees believe that by investing sustainably, they can serve their beneficiaries' best interests while also contributing to systemic transition.
The UK is moving towards a clearer legal framework for pension trustees to consider sustainability and systemic risks in their investment decisions. This shift reflects the understanding that the best interests of beneficiaries cannot be served by a system designed to destroy its own foundations. With institutional investors managing vast assets, their collective action could potentially engineer a new economic system.
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