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ESG and Climate Change: Pension Fund Dos and Don’ts

Pension fund administrators have a fiduciary duty to prudently manage financial risks and opportunities when investing plan assets and when managing plan operations that are paid from the pension fund. This includes the financial risks and opportunities associated with climate change and other environmental, social and governance (ESG) issues. But what are the legal dos and don’ts?

In an article for the C.D. Howe Institute, McCarthy Tétrault’s Randy Bauslaugh, Co-Chair of the Firm’s national Pensions, Benefits & Executive Compensation practice and Pension Funds Group, identifies the legal obligations of pension fund fiduciaries and plan administrators when dealing with ESG issues, including climate change. The peer-reviewed paper, “ESG and Climate Change: Pension Fund Dos and Don’ts,” provides practical guidance for administrators and other stakeholders and makes recommendations about further legislative reform.

The paper covers the following topics:

  • the fiduciary duty of pension plan administrators: prioritize financial purpose
  • the different duty owed by other institutional fiduciaries
  • possible exceptions to financial priority
    •   as a tie-breaker
    •   direct fiduciary discretion in plan documents
    •   a DC plan exception
  • ESG investment disclosure content
  • ESG factor integration in plan operations
  • whether legal reform is needed

The C.D. Howe Institute is a registered charity and an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies.

ESG and Climate Change: Pension Fund Dos and Don’ts Gain insight on the legal obligations of pension fund fiduciaries in “ESG and Climate Change: Pension Fund Dos and Don’ts”

ESG and Climate Change: Pension Fund Dos and Don’ts

Gain insight on the legal obligations of pension fund fiduciaries in “ESG and Climate Change: Pension Fund Dos and Don’ts”

 

Download the article