On fiduciary duty: good to hear your thoughts on this. It looks like I drew the wrong conclusion from the evidence. Would you agree with the following statement instead:
Fiduciary duty seems to be an obstacle, and could be significantly raising the costs of shareholder activism. That said, it doesn’t seem to make the costs prohibitively high. Significant shareholder activism still seems to be possible under current laws and norms, at least on climate change.
That seems right to me given the evidence. I should say that it’s not just the New York City Pension Fund who has been active on climate change. They were joined in their activism campaign by CALPERS and CALSTRS, two of the largest public pension funds in the world.
Sorry for the slow reply. I agree with this version of the statement in italics:
Fiduciary duty seems to be an obstacle, and could be significantly raising the costs of shareholder activism in some circumstances. That said, it needn’t make the costs prohibitively high in the right circumstances. Significant shareholder activism still seems to be possible under current laws and norms, at least on climate change.
Indeed, I’d go further and argue that at least for some actions, it can be not only consistent with fiduciary duties (or even a requirement of fiduciary duties; at least according some lawyers). I think it’s useful to distinguish between different types of investor/asset owner. If the asset owner is (say) a high net worth individual in the EA movement, or a pension scheme which is culturally particularly interested in impact, then I’d agree with what you said in the original post, at least according to some reports from law firms. However in practice, for most other asset owners (i.e. ~all of the financial system) fiducary duties are a real issue because (a) some trustees will be uncertain about whether impactful actions could contradict fiduciary duties (b) others will have animosity to impactful actions, and will use fiduciary duties as an excuse to oppose them.
Hi Sanjay, thanks for the comments.
On fiduciary duty: good to hear your thoughts on this. It looks like I drew the wrong conclusion from the evidence. Would you agree with the following statement instead:
Fiduciary duty seems to be an obstacle, and could be significantly raising the costs of shareholder activism. That said, it doesn’t seem to make the costs prohibitively high. Significant shareholder activism still seems to be possible under current laws and norms, at least on climate change.
That seems right to me given the evidence. I should say that it’s not just the New York City Pension Fund who has been active on climate change. They were joined in their activism campaign by CALPERS and CALSTRS, two of the largest public pension funds in the world.
Sorry for the slow reply. I agree with this version of the statement in italics:
Fiduciary duty seems to be an obstacle, and could be significantly raising the costs of shareholder activism in some circumstances. That said, it needn’t make the costs prohibitively high in the right circumstances. Significant shareholder activism still seems to be possible under current laws and norms, at least on climate change.
Indeed, I’d go further and argue that at least for some actions, it can be not only consistent with fiduciary duties (or even a requirement of fiduciary duties; at least according some lawyers). I think it’s useful to distinguish between different types of investor/asset owner. If the asset owner is (say) a high net worth individual in the EA movement, or a pension scheme which is culturally particularly interested in impact, then I’d agree with what you said in the original post, at least according to some reports from law firms. However in practice, for most other asset owners (i.e. ~all of the financial system) fiducary duties are a real issue because (a) some trustees will be uncertain about whether impactful actions could contradict fiduciary duties (b) others will have animosity to impactful actions, and will use fiduciary duties as an excuse to oppose them.