UK Parliament group on RI says it will lobby for law on broader ESG fiduciary duty

UK politicians who are part of an informal parliamentary special interest group on responsible investment say they will attempt to drive through legislation that could clarify how institutional investors may take account of environmental and social factors as part of their fiduciary duty. Catherine Howarth, CEO at campaign group ShareAction, told Responsible Investor that the politicians who are part of the All Party Parliamentary Group (APPG) on responsible investment, have offered to raise points in the UK Parliament based on a draft bill on responsible investment structured by ShareAction. The All Party Parliamentary Group on responsible investment, for which ShareAction acts as the secretariat, has 20 members and includes a clutch of high-profile UK politicians. They include Caroline Lucas who is the only elected MP from the UK’s Green Party, John Cruddas, an MP for the Labour opposition party who is widely seen as its strategist for the coming general election in 2015, and Conservative MP Zac Goldsmith, the brother of Ben Goldsmith, the founding partner of WHEB, the London-based sustainability-focused investment firm. Ben Goldsmith donated £20,000 to the Green Party prior to the 2010 UK general elections in which Lucas became Britain’s first elected Green Member of Parliament. Howarth said there was a private pensions bill going through Parliament on which MPs from the APPG for responsible investment have offered to table amendments using ShareAction’s draft bill as a template: “We are looking at the scope to get it enacted on the back of the current Pensions Bill,” Howarth said.The Pension Schemes Bill 2014-15 is a government bill to encourage pension arrangements that offer people different levels of certainty in retirement or that involve different ways of sharing or pooling risk. ShareAction’s ‘Responsible Investment Bill’, which is based on some of the recommendations in the Kay Review, includes clauses which say a fiduciary investor is empowered to have regard to social and environmental considerations and that a fiduciary investor must comply with any reasonable request for information on its activities from its beneficiaries. It comes as ShareAction also launched a manifesto on responsible investment in the UK Parliament last week. The manifesto calls for the UK’s pension schemes to have the same obligation as listed companies to hold annual meetings, providing members with the opportunity to question them on where their money is invested. It also calls for all pension providers to owe a legal duty to scheme members to act in their best interests. The UK’s Shadow (opposition party) Minister for Work and Pensions, Gregg McClymont, has backed the suggestions in the manifesto. McClymont said: “The FCA is about to consult on governance in contract-based workplace pension schemes. There is no justification for the governance requirements to be watered down in comparison with what is required for trust-based schemes. ShareAction is right to say that all workplace pension providers should have a fiduciary duty to scheme members.” Launching the manifesto, Howarth said ShareAction was looking at expanding its work to bring its agenda to the European Commission and European Parliament.