(Re-)Interpreting Fiduciary Duty to Justify Socially Responsible Investment for Pension Funds?

Manuscript Conceptual Research IssueA critical issue for the future growth of socially responsible investment (SRI) is to what extent institutional investors such as pension funds can be persuaded to engage in it. Research FindingsPrevious commentary suggests that fiduciary duty either already mandates SRI for pension funds, or at least can be made to do so rather easily. In contrast with this, however, this paper finds that none of the considered interpretations is able to justify engagement on social and environmental issues across the board. Indeed, the problem to some extent seems rooted in the very concept of fiduciary duty. SRI through reinterpretations of fiduciary duty, provided mainly by legal scholars and practitioners. By addressing the more philosophical issue of how far the concept of fiduciary duty can be stretched to accommodate SRI (a project of conceptual rather than legal clarification), it provides an evaluation of the contemporary debate which is independent of squabbles about existing law. Policy Implications SRI is unjustified or unjustifiable more generally. A more promising way to legally mandate SRI may be through what is dubbed independent social and environmental obligations.