Five issues for the government to consider
However, Greg Clarke, the Secretary of State, has made it clear that consideration of non-financial factors should not lead to investment policies which run contrary to UK foreign policy. This is concerning because the government has on several occasions – including in the consultation document itself – conflated financially material environmental, social and governance factors with non-financial factors.
The Law Commission was very clear: trustees shouldtake into account all financially material factors includingESG. Local authorities are not trustees in the same sense as trustees in private defined benefit schemes, but Nigel Giffin QC’s helpful 2014 opinion clarifies they nonetheless hold fiduciary duties towards scheme members. The Law Commission’s report on fiduciary duties should be used as the foundation on which the new regulations are built….”
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