This post was cross-posted from Responsible-Investor.com.
In “Reclaiming Fiduciary Duty Balance,” James Hawley, Keith Johnson, and Ed Waitzer maintain that narrow interpretations of fiduciary duty have "generated myopic investment herding behaviors" and caused fiduciaries to focus increasingly on their short-term liabilities at the expense of longer-term ones. Institutional fund trustees, the paper argues, cannot meet those longer-term obligations unless they have access to information on the full range of ESG risks for the companies in which they invest. The sorry state of ESG corporate reporting suggests that they do not have such access now. If fund trustees begin to exercise this fiduciary responsibility in earnest, the impact on public company reporting will be immense. Institutional funds collectively own 73% of the stocks issued by Fortune 1000 companies.