The UK not-for-profit has criticised the current ‘piecemeal’ approach to responsible investment and is issuing its own definition and guidance. However, investment managers say more clarity on fiduciary duty is needed.
Financial services around the world must take “positive and negative impacts on people and planet as seriously as financial risk and return”, said non-profit ShareAction, as it sought with new guidance to address the financial industry’s “current lukewarm and piecemeal approach” to responsible investment.
The UK organisation said that despite various regulations and guidance seeking to define responsible investment, “inadequate ambition, a narrow focus on financial risk and return, and a lack of accountability to pension savers, retail investors and other underlying investors” are preventing responsible investment from joining the mainstream.
However, Eleanor Fraser-Smith, head of sustainability at UK-based investment manager Victory Hill Capital Partners, was doubtful ShareAction’s proposed definition would clarify the meaning of responsible investment.
“ShareAction seems to be proposing a narrowing of the definition to impact-focused strategies only,” she said. “If responsible investment is to look beyond ESG risk management to sustainable impact, there needs to be clarification and guidance on investors’ fiduciary duty.”
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