A major recent conference on business and the environment heard that there are no legal barriers preventing fiduciaries from integrating environmental, social and governance factors into investment decisions.

Paul Watchman, a partner with Freshfields Bruckhaus Deringer (a leading UK law firm for over 250 years), told the Globe 2006 Conference March 30 in Vancouver that there is no evidence to support the long-standing misconception in the investment community that fiduciaries are prevented from incorporating non-financial considerations into their investment decisions.

“Contary to popular industry belief, the law was not that at all,” Watchman said in a panel discussion entitled Mainstreaming SRI.

Watchman was commenting on a recent report prepared by Freshfields for the United Nations Environment Program Finance Initiative. The report, released in October, 2005, analyses case law and legislation in 10 jurisdictions, including Canada.

Watchman said that, contrary to the widespread belief that incorporation of ESG is prohibited by fiduciary obligations, the report finds that the integration of ESG issues is clearly permissible and is arguably required in all jurisdictions.

“Since the report, there has been a greater appreciation in pension funds of the need for someone with ESG experience to be involved in the mandate of the pension fund,” Watchman told the conference.

The workshop was part of a series of panels on Finance and Sustainability at the Globe 2006 conference, the largest conference on business and the environment in North America. The Social Investment Organization partnered with Globe in organizing some of the panels for the Finance and Sustainability track.

For full coverage of the conference, visit http://www.globe2006.com/.

For information on the Freshfields report, visit http://www.unepfi.org/events/2005/roundtable/press/index.html.

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