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Should pension funds' fiduciary duty be extended to include social, ethical and environmental concerns? A study of beneficiaries' preferences

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  • Magnus Jansson
  • Joakim Sandberg
  • Anders Biel
  • Tommy Gärling

Abstract

Many fund managers, lawyers and academics assume that pension funds' legal responsibility to manage assets in the best interests of their beneficiaries (their fiduciary duty) rules out including social, ethical and environmental concerns in investments. A counter-argument is that beneficiaries' best interests can be interpreted more broadly to also encompass such concerns. We seek to contribute to resolving this controversy by measuring preferences for social responsible investment (SRI) among beneficiaries of pension funds. The data from a survey questionnaire answered by 1119 future beneficiaries of the Swedish pension system show that beneficiaries on average prefer their pension funds to go beyond financial concerns and engage in SRI. Analysing the determinants of the preferences, we find support for a model including both financial motives (beliefs about financial risk and returns) and values-based motives (self-transcendent value priorities). Our results give unique insights into the psychological drivers of beneficiaries' preferences that are highly pertinent to present attempts at rethinking the aims of pension investments.

Suggested Citation

  • Magnus Jansson & Joakim Sandberg & Anders Biel & Tommy Gärling, 2014. "Should pension funds' fiduciary duty be extended to include social, ethical and environmental concerns? A study of beneficiaries' preferences," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 4(3), pages 213-229, July.
    • Handle: RePEc:taf:jsustf:v:4:y:2014:i:3:p:213-229
    DOI: 10.1080/20430795.2014.928997
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    References listed on IDEAS

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    1. Jon Entine, 2005. "Pension Fund Politics: The Dangers of Socially Responsible Investing," Books, American Enterprise Institute, number 50958, September.
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    Cited by:

    1. Andreas G. F. Hoepner & Lisa Schopohl, 2020. "State Pension Funds and Corporate Social Responsibility: Do Beneficiaries’ Political Values Influence Funds’ Investment Decisions?," Journal of Business Ethics, Springer, vol. 165(3), pages 489-516, September.
    2. Costanza Torricelli & Beatrice Bertelli, 2022. "ESG screening strategies and portfolio performance: how do they fare in periods of financial distress?," Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance) 0087, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    3. Tommy Gärling & Magnus Jansson, 2021. "Sustainable Investment: Consequences for Psychological Well-Being," Sustainability, MDPI, vol. 13(16), pages 1-10, August.
    4. Maria Carolina Rezende de Carvalho Ferreira & Vinicius Amorim Sobreiro & Herbert Kimura & Flavio Luiz de Moraes Barboza, 2016. "A systematic review of literature about finance and sustainability," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 6(2), pages 112-147, April.
    5. Neil Stuart Eccles, 2018. "Remarks on Lydenberg’s “Reason, Rationality and Fiduciary Duty”," Journal of Business Ethics, Springer, vol. 151(1), pages 55-68, August.
    6. Andreas Hoepner & Arleta Majoch, 2016. "Pension Funds and the Principles for Responsible Investment: Multiplying Stakeholder Salience?," ICMA Centre Discussion Papers in Finance icma-dp2016-07, Henley Business School, University of Reading.

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