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From fiduciary duties to fiduciary relationships for socially responsible investing: responding to the will of beneficiaries

Citation

Richardson, BJ, From fiduciary duties to fiduciary relationships for socially responsible investing: responding to the will of beneficiaries, Journal of Sustainable Finance & Investment, 1 pp. 5-19. ISSN 2043-0795 (2011) [Refereed Article]

Copyright Statement

Copyright 2010 Earthscan

DOI: doi:10.3763/jsfi.2010.0002

Abstract

This article examines whether socially responsible investing (SRI) may be legally permissible if it fulfills the will of the beneficiaries in a fiduciary relationship, and considers potential legal reforms to give better effect to the interests of beneficiaries. It thus examines a relatively neglected aspect of fiduciary finance, which so far has focused on whether SRI is ‘financially material’ to investment performance. It argues that by re-framing fiduciary finance as an active relationship rather than merely the mechanical application of legal duties, we may allow trustees to invest socially pursuant to the wishes of beneficiaries. However, this article also suggests that considerable legal and practical obstacles confront this path to SRI. They include the trustees’ duty to treat different beneficiaries even-handedly and the traditionally passive role that trust law has cast beneficiaries. Reliance on widely held social customs and evaluation of third parties’ interests as a proxy for the will of beneficiaries, and the role of statutory reforms mandating consultation with and representation of beneficiaries on the governing boards of trustees, are also considered in this article. It concludes by suggesting some potential legal reforms to strengthen reliance on the will of beneficiaries as a means of SRI.

Item Details

Item Type:Refereed Article
Keywords:Beneficiaries, Fiduciary duties, Institutional investors, Legal reform, Socially responsible investment, Trustees
Research Division:Law and Legal Studies
Research Group:Law
Research Field:Environmental and Natural Resources Law
Objective Division:Law, Politics and Community Services
Objective Group:Community Service (excl. Work)
Objective Field:Environmental Services
Author:Richardson, BJ (Professor Benjamin Richardson)
ID Code:91837
Year Published:2011
Web of Science® Times Cited:1
Deposited By:Faculty of Law
Deposited On:2014-05-30
Last Modified:2017-10-30
Downloads:0

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