Panel 2: The Climate Duties of Asset Managers

Asset managers face pressure from investors, as well as from the practical realities of climate change, to consider both climate risks to their portfolios and the climate impacts of their investments. However, the investment decisions of asset managers are bound by fiduciary duties designed to ensure that managers are working in the best interests of those for whom they invest. Opposing lawyers have variously argued that these fiduciary duties require asset managers to divest from climate-damaging activities, invest in “underpriced” fossil fuel assets, or ignore climate change entirely. At the same time, climate change has become highly politicized, and asset managers have faced legal attacks from conservative activists and legislators for considering ESG factors like climate change in their investment decisions. How do fiduciary duties shape investor action on climate change? Do fiduciary duties demand that asset managers adopt a narrow, single-share value perspective, or is there room for more holistic portfolio management?