By: The Working Group for the Financial Markets Law Committee, 6 February 2024

For pension funds, setting investment strategy, principles and policies and making investment decisions have all become more challenging in the context of sustainability and the subject of climate change.  This has given rise to renewed uncertainty over what the “fiduciary duties” or trust duties owed by trustees of pension funds require in this context.

Since the pensions sector is a major allocator of capital, legal uncertainties affecting pension fund trustees have the potential to adversely affect the wholesale financial markets. In keeping with our general remit, FMLC has sought only to address legal uncertainties which may impact what decisions and actions are permissible for trustees.

This paper is intended to provide, in terms that are understandable to pension fund trustees, a very general explanation of the legal position and the uncertainties and difficulties that exist.

FMLC, 6 February 2024