The PRI Academic Network is pleased to announce the release of the second volume of the RI Quarterly. The theme of this issue focuses on fiduciary duty, and reviews the following seven articles:

The public fiduciary: a Canadian perspective

The authors examine the role of pension fund trustees in Canada, where a framework for fiduciary duty has adapted to changing social and governance challenges which require trustees to take into account longer term issues such as systemic market risk, intergenerational equity and sustainable development.

The basis of fiduciary duty in investment in the United States

Youngdahl reviews the history and development of the concept of fiduciary duty in the United States, where the interpretation and implementation of fiduciary duty has and will continue to develop based on a core set of common sense principles.

Fiduciary duty and sin stocks: is vice really nice?

Hoepner and Zeume investigate whether fiduciary duty obliges pension fund trustees to invest over-proportionally in ‘sin stocks’. The authors argue that this obligation would only exist if these sectors are expected to outperform the market in the future, and conclude that there is no evidence these sectors are likely to do so.

Uncertain times, plural rationalities and the pension fiduciary

The current and prolonged uncertainty in financial markets has demonstrated that modern portfolio theory is no longer a reliable investment tool. The authors explain how the plural rationality framework can help trustees make asset allocation decisions in an uncertain environment, balancing the interests of different groups of beneficiaries.

Fiduciary duty and the search for a shared conception of sustainable investment

Clark reviews the historical legal background of the evolution of fiduciary duty in the UK and US, concluding that investment innovation has been stifled by a regulatory approach, and that the concept of fiduciary duty today is inadequate to promote either the best interests of beneficiaries or sustainable investment.

Challenging conventional wisdom

A combination of new analytical methods, evolving investment beliefs and changing industry conventions are leading to a wider interpretation of fiduciary duty than has been the norm in the past, laying the foundation for a longer-term investment approach that integrates ESG criteria into investment decisions.

The voice of the beneficiary

Berry and Scanlan argue that beneficiaries should be consulted on the general policies of their pension fund, and that trustees should take their wishes into account when making investment decisions. They conclude that the legal framework supports a broad interpretation of fiduciary duty though clarification of the law would support greater beneficiary engagement in the future.