What is Fiduciary Duty?

Fiduciary duty (or equivalent obligations) exist to ensure that those who manage other people’s money act in the interests of beneficiaries and do not serve their own interests.

The most important of these duties are:


Fiduciaries should act honestly and in good faith in the interests of their beneficiaries, should impartially balance the conflicting interests of different beneficiaries, should avoid conflicts of interest, and should not act for the benefit of themselves or a third party.


Fiduciaries should act with due care, skill and diligence, investing as an ordinary prudent person would.

These principles require fiduciaries to concern themselves with risks, trends, innovation and the future, both in the short term and over the long term. In the case of pension funds this may be many decades.

Fiduciary duty itself is not a static concept. It evolves and adjusts in response to changes in knowledge, market practices and conventions, regulations and policies, and social norms. Climate change and sustainable development represent systemic risks and opportunities that require pension funds to adopt proactive strategies and focus on the long-term impacts of their investments.

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