The Law Commission have published a short document which summarises the conclusions of their examination of the fiduciary duties of investment intermediaries. This document provides guidance for pension fund trustees’ duties when setting an investment strategy. In particular, the guidance confirms that:

• Trustees may always take account of any financial factor which is relevant to the performance of an investment and should take account of financially material risks. When investing in equities over the long-term, trustees should consider, in discussion with their advisers and investment managers, how to assess risks. This includes risks to a company’s long-term sustainability.
• Trustees may also take account of non-financial factors if two tests are met. Firstly, do scheme members share the concern, and secondly, does the decision risk significant financial detriment? Any decision made on non-financial grounds is subject to both tests. However, the ultimate decision should be looked at in the round, considering the evidence on both questions.

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