Part I of this Article clarifies and strictly defines the frequently nebulous idea of socially responsible investing (“SRI”), explaining its history, trends, and current status. To give perspective and perhaps temper hype, Part II discusses the efficacy of SRI as a method of change, concluding that while SRI may not have much effect on air quality or oppressive foreign governments, there are situations where SRI is useful and even necessary. Part III looks at the conflict between SRI and the fiduciary duties of trustees, investment advisers, and broker-dealers. It shows the contractual nature of fiduciary duties and why this is relevant for SRI. Part III also explores important legislation, such as ERISA, that affects fiduciary duties in certain circumstances. Further, Part III examines the superficial and non-legal analysis in some of the high-profile commentary on SRI. Part IV offers the legal analysis that has been lacking, examining SRI through the doctrines of authorization and ratification, as well as determining the effects of exculpation clauses in trust instruments and contracts. The Article concludes by explaining when SRI is lawful for fiduciaries and instructing them as to how they can engage in SRI without fear of breaching their fiduciary duties.
Recommended CitationWilliam Sanders, Resolving the Conflict Between Fiduciary Duties and Socially Responsible Investing, 35 Pace L. Rev. 535 (2014)
Available at: https://digitalcommons.pace.edu/plr/vol35/iss2/2