UNEP FI Asset Management Working Group The - UNEP Finance ...
UNEP FI Asset Management Working Group The - UNEP Finance ...
UNEP FI Asset Management Working Group The - UNEP Finance ...
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U.N. to managers: Ignore ESG issues at own legal peril<br />
By Barry B. Burr<br />
Source: Pensions & Investments<br />
Date: July 14, 2009<br />
Investment managers and consultants could face negligence lawsuits if they don’t consider environment, social<br />
and corporate governance issues when making investment decisions for pension funds and other clients,<br />
according to a new United Nations report.<br />
“In tendering for investment mandates, it would be expected that the investment consultant or asset manager<br />
would raise ESG considerations as an issue to be taken into account and discussed with the client, even if the<br />
pension fund had not specified ESG considerations as material to the tender,” Paul Watchman, CEO of Quayle<br />
Watchman Consulting, said in the report. Mr. Watchman was a legal consultant on the report.<br />
“If the investment consultant or asset manager fails to do so, there is a very real risk that they will be sued for<br />
negligence on the ground that they failed to discharge their professional duty of care to the client by failing to<br />
raise and take into account ESG considerations,” he said.<br />
Among the recommendations in the report, “Advisers to institutional investors have a duty to proactively raise<br />
ESG issues within the advice that they provide, and that a responsible investment option should be the default<br />
position. <strong>The</strong>refore, responsible investment, active ownership and the promotion of sustainable business<br />
practices should be a routine part of all investment arrangements, rather than the optional add-on which many<br />
consultants appear to treat it as.”<br />
<strong>The</strong> report, “Fiduciary Responsibility: Legal and Practical Aspects of Integrating Environmental, Social and<br />
Governance Issues into Institutional Investment,” was prepared by the asset management working group of the<br />
United Nations Environment Programme’s <strong>Finance</strong> Initiative, which is a partnership of the U.N. and some 180<br />
investment firms, banks, and insurance companies. <strong>The</strong> group includes AIG Investments, BNP Paribas <strong>Asset</strong><br />
<strong>Management</strong>, Calvert Investments, ClearBridge Advisors, HSBC Global <strong>Asset</strong> <strong>Management</strong>, Mitsubishi UFJ<br />
Trust & Banking, Nikko <strong>Asset</strong> <strong>Management</strong> Japan and Pax World <strong>Management</strong>.<br />
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