Fiduciary responsibility in retail funds: clarifying the prospects for SRI

This article assesses the fiduciary law context governing socially responsible investing (SRI) in retail funds in order to understand the scope for promoting sustainable development. Most scholarship on this subject has focused on institutional investors such as pension plans, yet the legal, institutional and market context of retail funds has some distinct characteristics. The article argues that although the retail sector offers the most generous legal space for SRI of any financial sector, SRI practice is far from mainstream owing to a range of organizational and economic impediments coupled with the drawbacks of a relatively permissive legal milieu. This article highlights that the obsessive focus on the supposed fiduciary law barrier to SRI can overlook other institutional obstacles to its practice, as well as to stress that it is insufficient merely to have a legally enabling framework if we wish SRI to make a more fundamental contribution to sustainability. Furthermore, any analysis of the fiduciary responsibility of retail funds is incomplete without taking into account the impact of other legal standards and duties in this sector such as from contract law and financial regulation.