In more news from the investing world, the UK government has moved to amend the country’s Pension Schemes Bill. The amendments would grant the government authority to issue binding guidance on how trustees should consider the materiality of ESG factors. A recent Responsible Investor article discusses the implications of the amendment:
“The amendment requires the government to consult appropriately on the guidance, which would require parliamentary approval, and it will be required to publish the guidance within 12 months of the section coming into force. Trustees and their fund managers ‘must have regard’ to the new guidance when it is published.'”
The political future of the amendment is uncertain as there is no consensus on the issue. While most agree that trustees need legal clarity on their ability to consider ESG factors, some disagree with incorporating such considerations into their fiduciary duties. If passed, binding guidance on ESG consideration would help prevent the kind of litigation discussed in today’s lead blog. When left undefined, pro and anti-ESG can both attempt to use fiduciary duty as a legal cudgel. Guidance on this issue would mean legal clarity and clear expectations for trustees.
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