Tuesday, January 25 2022


Asset managers should have stricter fiduciary duty rules to ensure their decisions are best for their beneficiaries and the company, according to a report released Wednesday by the Roosevelt Institute.

“The vast holdings of asset managers give them unprecedented power over resource allocation in our economy. The rules that govern their responsibilities lead these asset managers to make allocation and stewardship decisions that prioritize the profits of individual companies over the preservation of critical social and environmental elements. As a result, the choices of asset managers often exacerbate inequalities, environmental degradation and the decline of social institutions – leading to a system that is contrary to the needs of the very households whose savings are managed, ”said progressive economic policy thinks tank report, “Responsible asset managers: new fiduciary rules for the asset management industry. “

Policymakers should address this misalignment with legislation creating two new fiduciary obligations for asset managers, according to the report. One would make them responsible for reviewing the full range of impacts of their investment decisions on beneficiaries, communities and the environment. The second would require substantial adherence to portfolio carbon neutrality, with climate risk being one of the most pressing issues asset managers should help address, the authors said.

“The financial assets of American households – currently worth over $ 60 trillion – are held and managed in corporate shares in ways that exacerbate the climate crisis, income inequality and other ills society ‘not because retirement and financial account holders want it, but because asset managers and asset owners interpret their fiduciary duty as maximizing financial returns, the co-authors said. Lenore Palladino, Fellow of Roosevelt, and Rick Alexander, Founder of The Shareholder Commons, a non-profit organization that works for systemic change in capital markets through shareholder engagement. .



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