What is the statement?

The Statement calls on international policymakers and national governments to clarify the obligations and duties of investors and other organisations in the investment system. It calls, specifically, for governments to clarify that investors and other organisations in the investment system must act with due care, skill and diligence, must act in good faith in the interests of their beneficiaries and clients, and must take account of environmental, social and governance issues in their investment processes and in their engagement with the companies and issuers in which they invest.

Investors can sign-up to The Statement to both frame their both to frame their engagement on investor duties with policymakers and to demonstrate that this is an issue that is of real concern to investors.

For policymakers, the Statement should provide them with the confidence to clarify investors’ obligations and duties, knowing that this is an agenda that is supported by investors.

Why do we need a Statement? 

Launched in September 2015, Fiduciary duty in the 21st century was based on an analysis of law, policy and investment practice in eight countries: US, Canada, Germany, UK, Japan, Australia, South Africa and Brazil. It concluded that “failing to consider long-term investment value drivers, which include ESG issues, in investment practice is a failure of fiduciary duty.” 

The report also noted that, despite significant progress, many investors had yet to fully integrate ESG issues into their investment decision-making processes. It pointed to a variety of reasons for this, including a lack of regulatory clarity around fiduciary duties and wider investor duties, and the reluctance of many countries to adopt measures that would lead to national policy diverging significantly from international practice.

The report concluded that there was a need to clarify investors’ obligations and duties. This clarification would provide national governments with the confidence to act, knowing that other countries were also taking action.

What outcomes does the Statement seek? 

The Statement is looking for:

  • International and supranational policymakers to clarify investors’ obligations and duties, in particular, in relation to the integration of environmental, social and governance issues into investment practice.
  • National policymakers to ensure that their national policies align with this clarification of investors’ obligations and duties and to ensure that these policies are effectively implemented.

How would an international policy instrument relate to domestic policy?

The Statement acknowledges that the specific details of domestic policy design and implementation (e.g. whether the obligations and duties are codified or implemented through statutes, guidance, voluntary or mandatory instruments, whether specific reporting requirements are imposed on investment actors) are a matter for national policymakers and regulators. These decisions need to be made and evaluated in the context of national legal frameworks, pre-existing policy measures and approaches, and the state of development of the domestic investment markets.

We do, however, expect the clarification to encourage policymakers to monitor and report on the effectiveness of the national policies that they adopt, and to include provision for some form of assessment of, and reporting on, the aggregate impact of their policies. This will enable policymakers and other stakeholders to reflect on and learn from the actions that have been taken, and will increase the likelihood that meaningful outcomes will be delivered.

Why focus on investor duties and not fiduciary duties?

The duties and obligations that apply to investors differ between countries and between investors. They emerge from different sources. They may be defined in the deeds or other documents that define the purpose of the organisation, in the contracts these institutions have with their clients or beneficiaries, and at law (which, depending on the jurisdiction, could include statutes, case law, trust law, fiduciary law or corporate law).

The Fiduciary Duty in the 21st Century  report focused on fiduciary duty, which is generally recognised as a common law concept. It is also a concept whose scope of application (i.e. in terms of the investors that are considered to have fiduciary duties) differs between countries. While similar duties (e.g. loyalty, prudence) often apply in other jurisdictions and to investment actors other than those that are formally considered to be fiduciaries, these are often not defined as fiduciary duties.

In developing this statement, we wanted to both address the gaps and variations in the specific obligations and duties that are placed on investors and to develop a set of principles that have general applicability across all jurisdictions, that can be adopted irrespective of the specific legal system in question, and that provide a common set of duties and obligations that apply to all types of investment organisations.

Does the requirement to focus on ESG issues mean that investors have to compromise investment returns?

The Statement is clear that the expectation is that investors will be able to demonstrate that they have taken proper account of ESG issues in their investment practices and processes. This aligns with the manner in which courts and regulators have interpreted fiduciary and equivalent duties. Courts and regulators distinguish between decision-making processes and the outcome of the decision-making process. They recognise that investment decisions inherently involve commercial risks, and so they look for investors to demonstrate that they applied an appropriate degree of diligence in their good-faith pursuit of beneficiaries’ or clients’ interests. They are generally reluctant to specify how investors should take account of ESG opportunities and risks in their investment practices and processes. The regulators we interviewed for the Fiduciary Duty in the 21st Century  report were clear that investors should be aware of and manage ESG-related risks, and that investors should also pay close attention to decisions that lead to skews in portfolios.

This suggests that investors must take account of wider ESG issues, so long as there is a clear focus on beneficiaries’ interests. In that context, for example, a decision not to invest in coal mines (e.g. because of concerns about these assets being stranded as a result of climate change policy) is likely to be seen as consistent with investors’ duties and obligations to their clients or beneficiaries, so long as this decision is based on credible assumptions and a robust decision-making process. This requires investors to have the discipline to set out their investment beliefs, to be prepared to review the investment outcomes achieved and to have the willingness to change if the data changes or if it is clear that the decision is causing significant damage to beneficiaries’ or clients’ financial interests.

The views held by investment consultants and legal advisers are often a key influence on the actions taken by asset owners. A recurring theme in the interviews conducted for the Fiduciary Duty in the 21st Century  report was that the advice being given by these consultants and advisers – in particular in the US but also in other jurisdictions – is often based on a very narrow interpretation of investors’ duty, stressing short-term financial performance over other considerations. This advice reflects the frequent lack of legal clarity about investors’ duties;  in the absence of clarity about whether investors should take account of ESG issues in their investment practices and processes, it is often assumed by investment consultants and legal advisers that these issues are of limited relevance to the manner in which investors operate.

Which organisation should host/lead the development of such an instrument?

The Statement encourages supranational organizations with binding capacity such as the OECD and the European Commission to form a consensual view on the issue among their constituencies and to issue an instrument that will help guide the industry especially in developed and large emerging economies.

Are governments already taking action? 


This Statement follows precedent set by many governments in recent years:

  • The revised Fiduciary Rule, released by the US Department of Labor in April 2015 and due to come into effect later in 2016, which significantly extends the range of investment intermediaries whose advice is subject to a fiduciary standard.
  • The decision by the US Department of Labor to rescind its 2008 Bulletin on Economically Targeted Investments. The Bulletin had been seen by investors as discouraging them from considering environmental and social factors in the companies and funds in which they invest. 
  • The introduction of Stewardship Codes or equivalent requirements in a number of countries including Japan (Principles for Responsible Institutional Investors, 2014), Malaysia (Malaysian Code for Institutional Investors, 2014), South Africa (Code for Responsible Investing iin South Africa, 2011) and the UK (The Stewardship Code, 2010, revised 2012).
  • The revisions to the European Union’s Institutions for Occupational Retirement Provision (IORP) Directive.
  • China and France’s call in early 2016 for the OECD to examine the fiduciary duties of institutional investors.
  • The French Energy Transition for Green Growth Law, which came into effect on 1 January 2016, which strengthens mandatory carbon disclosure requirements for listed companies and introduces carbon reporting for institutional investors. 
  • Ontario’s pension standards legislation (PPA909) will, starting in 2016, requires pension funds to state in their investment policies whether and how ESG factors are taken into account in their decision-making processes.

What do investors see as the primary obstacles to the adoption of investor duties and obligations such as those set out in the Statement?

Our research for the Fiduciary Duty in the 21st Century report found that the following are commonly cited barriers:

  • The lack of regulatory clarity on investors’ duties and obligations.
  • The lack of regulatory oversight and accountability, in particular in relation to ESG integration and engagement (or stewardship).
  • Resource constraints, not least because of the growing complexity of the regulatory and other requirements faced by pension funds.
  • Knowledge and understanding of ESG issues, both in terms of how these issues might affect investment performance and of how ESG integration and responsible investment might be implemented within the organisation.
  • Personal values and perceptions, notably the common misperceptions that ESG issues are purely ‘ethical’ issues, that a focus on ESG  issues involves compromising investment performance and that it is difficult to add investment value through a focus on ESG issues.
  • Competing organisational priorities such as risk management and funding requirements which may lead to an excessive focus on short-term performance and a consequent lack of attention on long-term investment value drivers.
  • The lack of consensus on good or best practice standards for responsible investment.

Who can sign the Statement? How can my organisation sign up? 

We encourage institutional investors – asset owners, asset managers, insurance companies, sovereign wealth funds, etc – to sign the Statement. To become a signatory to the statement or for further information, please email [email protected].

We will report on the number of signatories and on the assets under management that they represent.

What are the expectations of signatories? 

There is no cost associated with signing. Signatories’ names and logos will appear in PRI and UNEP FI communications about the statement, both in printed copies and on the web. Signatory logos will only be used in the context of the statement unless the PRI and UNEP FI have received explicit permission for other uses.

Signatories are not required to speak to the press, although they can choose to be spokespeople. Being a signatory to the statement does not mean that signatories support any specific piece of legislation. 

Produced in collaboration with UNEP FI and Generation Foundation

UNEP FI and Generation Foundation logos

Global statement on investor obligations and duties