Financial Markets Law Committee publishes report on climate change and fiduciary duties

The Financial Markets Law Committee has published a report on pension scheme trustees’ evolving fiduciary duties and decision-making in relation to sustainability and climate change. The report is intended to provide an accessible explanation of the current legal position and the existing uncertainties and difficulties.

The paper notes that, although trustees have advisers and investment managers, the ultimate decision-making responsibility rests with the trustees. It also sets out the distinction between financial and non-financial factors and focuses on climate change as an important feature of sustainability in investing.

Trustees are being asked to consider and document their taking of climate change into account in their decisions under the Regulator’s new General Code. While neither the Code nor the Committee’s paper is binding on trustee decision-making, it may help trustees develop a clear policy in this area.