UKSIF Comment on FMLC’s Guidance on Climate Change & Pensions

Today, the Financial Markets Law Committee released their report on the consideration of sustainability factors and risks associated with climate change within the fiduciary duties of pension trustees. You can read the report here:

Pension Fund Trustees and Fiduciary Duties: Decision-making in the context of Sustainability and the subject of Climate Change

In response to the guidance, James Alexander, CEO of UKSIF commented as follows:

“The guidance which has just been published by the Financial Markets Law Committee (FMLC) delivers much needed clarity on fiduciary duty, which UKSIF has been requesting for a long time. There has been confusion for some time over how far environmental, social, and governance (ESG) risks and opportunities should be considered on behalf of beneficiaries. This guidance sends a clear message that ESG risks, and particularly climate change, present serious financial risks that should be considered by fiduciaries as part of standard investment practice, taking long and short-term investment horizons into account.

“This guidance states that it is simply good financial sense to consider sustainability, breadth of impact, and the long terms outlook of investments. We anticipate that this guidance delivers the clarification necessary to make fiduciary duty legislation much more effective in its purpose. We urge ministers and regulators to support the findings of the FMLC and continue to monitor the impact of these clarifications amongst fiduciaries and their advisers.”