RI Europe 2015: Governance champion Bob Monks backs suing pension funds over climate and fiduciary duty

“This is the way you get something done,” says founder of ISS.

Bob Monks, the renowned corporate governance champion, has backed the idea of suing pension funds to test if they are failing in their fiduciary duty by not factoring climate change risks into their fund investments.
“If you want to get something done – rather than appear to – you bloody well sue; that way you actually get their attention,” he told the RI Europe 2015 event in London this week. Monks, co-founder of Institutional Shareholder Services (ISS) was speaking on a panel with John Hewson, the former Australian politician and economist who chairs the Asset Owners Disclosure Project (AODP) campaign.
In April the AODP formally launched a project called the Climate and Pensions Legal Initiative (CPLI), which will work with pension fund members to challenge trustees and managers to fulfil their legal duty to protect investments from climate risk.Hewson told delegates: “We’re going to sponsor a case to bring a pension fund to account.”
He said the hope is that the test case will help to change the nature of fiduciary duty, though the AODP has not formally identified a pension fund target.

“We’re going to sponsor a case to bring a pension fund to account” – AODP’s Hewson.

He said: “Some times the only way you can get the attention of people is to hit them over the head with a piece of [wooden] 3×2!”

Hewson said it is up to investors to “drive the argument” on climate change given the lack of leadership from governments and the prospect that the “risk of a climate induced financial crisis is very real”.