Mark Hinnells

The fiduciary duty disconnect: who has responsibility on climate?

Mark Hinnells pic By Dr Mark Hinnells, director of Susenco Consulting Ltd

Fiduciary duty is when one person has an obligation in law to act in the best interests of another. It has usually been seen as financial and relatively short term.Currently the fiduciary duties of various actors – including cabinet ministers, fund or investment managers and company directors – are defined in different places in different ways, in a combination of law, policy and guidance, some of which is litigable and some is not.

Increasingly, a longer time frame is being applied to fiduciary duty. As the impacts and costs of climate change are better understood, the risk to assets, investments, companies, financial systems and ultimately GDP becomes ever more obvious.

What steps do governments need to take on climate change?

Mark Hinnells, director of Susenco Consulting Ltd, ponders the implications of the ICJ Advisory Opinion on Obligations of States in respect of Climate Change

On 23rd July the International Court of Justice CJ passed an Advisory Opinion on Obligations of States in respect of Climate Change.

The opinion has clearly not been issued in isolation. It sits alongside a history of Intergovernmental Panel on Climate Change (IPCC) reports published since 1990, with increasingly urgent scientific evidence. It supports the Paris Agreement 2015 targets to limit warming to 1.5 to 2 degrees Celsius, implying a halving of greenhouse gas emissions by 2030, and net zero emissions by mid-century. Governments are currently in their third round of making Nationally Declared Contributions (NDCs) towards the Paris Agreement.

Fiduciary duty, ESG and climate change

Mark Hinnells pic By Dr Mark Hinnells, director of Susenco Consulting Ltd, London and Hong Kong

Fiduciary duty is the obligation of a decision-maker to act in the best interests of their client. Trustees, fund managers, directors – even cabinet ministers – have a fiduciary duty. The whole financial system rests on discharging it appropriately. Should the discharge of fiduciary duty have regard to environment, social and governance (ESG) issues and climate change? And if so, how?