Eumedion: fiduciary duty of institutional investors should also encompass sustainability

22-01-2018

Eumedion believes that considering sustainability factors when making investment decisions should be part of the fiduciary duty of institutional investors. That is the key message of the response submitted by Eumedion to the EU consultation on institutional investors and asset managers' duties regarding sustainability.

It should be noted however, that the scope of sustainability is broader than just environmental, social and governance aspects. Institutional investors are expected to consider all relevant and material factors that impact a company’s ability to create long-term value. Which aspects are relevant and material to a company depends, amongst others, on the nature of its business, its strategy, its stakeholders and the geographical scope of its operations. It is therefore important that companies are sufficiently transparent on these issues. The EU Directive on the disclosure of non-financial and diversity information by certain large undertakings, which is applicable since book-year 2017, may contribute to improved sustainability reporting. Of institutional investors can be expected that they publicly disclose how sustainability factors are being considered in their investment policy. Furthermore, it is important that institutional investors consult and inform their ultimate beneficiaries and clients on their responsible and sustainable investment policy.