NSFM Fiduciary Duty Working Group Materials Highlighted in UNPRI Webinar: The United Nations Principles for Responsible Investment (UNPRI) Academic Network hosted a webinar on 19 January 2011 which featured work done by the NSFM Fiduciary Duty Working Group. The NSFM presentation examines how outdated factual assumptions that underlie late twentieth century interpretations of fiduciary duty, together with the unnoticed substitution of investment theory (which itself has come under considerable criticism) for fundamental legal principles, have undermined pension sus
Laureen Tessier writes: At a time when investors are committing to stewardship and voting policies, we should wonder why executing a vote is such a complex procedure and particularly why it is such an expensive one.
The investment community is under pressure to disclose how it votes and where. Institutional investors are now expected to vote not only in their home countries but anywhere they invest; and rightly so. These are of course legitimate expectations since voting is a right and a duty.
In response to a UK Department for Business Innovation & Skills public consultation on A Long-Term Focus for Corporate Britain, NSFM participants have submitted a comment letter on the impact of short-termism in the financial markets. The NSFM letter suggests exploring changes in asset manager contract mandates, providing additional guidance on interpretation of fiduciary duty, development of best practice codes, shifting burdens of proof in lawsuits involving fiduciary liability and adopting tax or proxy voting right changes as potential steps to address short-termism. The letter was
NSFM participant Ed Waitzer endorses a proposed UN policy framework to manage business and human-rights challenges, and calls on those involved or interested in the challenges of corporate social responsibility to give the framework their practical support. The framework was developed by John Ruggie, a professor at Harvard’s Kennedy School of Government. Mr. Ruggie is welcoming public feedback on his blueprint, through a dedicated online forum, until 31 January 2011.
Catherine Jackson and Keith Johnson write: An unusually candid comment from Unilever CEO, Paul Polman, was highlighted by Financial Times columnist Michael Skapinker in a November 22, 2010 op-ed article. “Unilever has been around for 100-plus years. We want to be around for several hundred more years. So if you buy into this long-term value-creation model, which is equitable, which is shared, which is sustainable, then come and invest with us.
In the early months of 1989, few Germans and almost no international relations specialists believed that the Berlin Wall, the symbol par excellence, of a divided Germany, would be reduced to rubble by the end of the year. But what ordinary Germans were saying - in larger and larger numbers - was that "This can't go on". They didn't really know what they wanted or what would replace it and they certainly didn't know who would lead the process of change.
Cindy Williams writes: The interests of long-term investors such as pension funds can be advanced by regulation that reduces the misalignment between companies and their investors, and within the investment chain. My view on the latest U.S. regulatory developments is that much is yet to be done to reach this goal.
The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law on July 21, 2010. The Bill only partially addresses a number of the major issues for reform:
"UKSIF Chief Executive and NSFM member Penny Shepherd has produced a webcast for the CFA Institution on ‘A Short History of Responsible Investment in Europe.’ The webcast tracks the stages of development of Responsible Investment from ‘The Ethical Era’ through ‘Waking up to Materiality’ to the present, ‘A Mainstream Choice’. Penny explores 7 dimensions of change and suggests that the future direction will be a new relationship between investment and society.
The webcast can be viewed on the CFA Institute website via http://bit.ly/PennyS .
MINES ParisTech, the University of Paris 1 Pantheon-Sorbonne, the Paris School of Economics jointly organize an academic conference on the economics of Corporate Social Responsibility (CSR). CSR means socially and environmentally friendly actions not required by law, going beyond compliance, privately providing public goods, or voluntarily internalizing externalities. It is an important economic phenomenon with broad implications for firms, employees, consumers, investors, governments and NGOs alike.
Nicholas A.J. Taylor writes: It is now widely acknowledged that business operations and investment capital can contribute to peace and stability in host societies. The inverse is also true, however: poor risk management may not only contribute to political instability and violent conflict, but it may also harm the foreign organization by increasing the risk of doing business, including creating difficulties in repatriating assets, and ensuring the safety of personnel. This in turn puts investment capital at risk.