Post by lairezippert on Dec 23, 2011 8:36:15 GMT 4
From Fiduciary Duties to Fiduciary Relationships for Socially Responsible Investing: Responding to the Will of Beneficiaries
Benjamin J. Richardson
University of British Columbia - Faculty of Law
Journal of Sustainable Finance & Investment, Vol. 1, No. 1, pp. 5-19, 2011
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.
papers.ssrn.com/sol3/papers.cfm?abstract_id=1967224
Benjamin J. Richardson
University of British Columbia - Faculty of Law
Journal of Sustainable Finance & Investment, Vol. 1, No. 1, pp. 5-19, 2011
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.
papers.ssrn.com/sol3/papers.cfm?abstract_id=1967224