A few weeks ago I wrote here about the political back-and-forth over the seemingly academic topic of fiduciary risk in American pension plans. The issue was ESG and in particular a Trump-era rule which, it appeared, restricted the ability of pension trustees to consider ESG factors.

The Democrats have now put forward a Bill to change direction, and to make clear that ESG factors can be considered by fiduciaries. Very interestingly, the Bill proposes that fiduciaries consider ESG factors as 'tie-breakers' when deciding between other comparable options.

The change of policy, if implemented, would put US pension funds back on the same direction of travel as many other fiduciaries when considering ESG. UK charities, for example, have been nudged towards ESG investing by recent improvements to the Charity Commission guidance on the point, as I discussed here.

Trustees of private trusts in jurisdictions including the Channel Islands, Isle of Man, Cayman, BVI, Bermuda and many others, are displaying an increasing appetite for ESG, often prompted by the demands of settlors and beneficiaries. However, the fiduciary risk issues are yet to be properly addressed in the private trusts world. Perhaps the 'tie-breaker' device in the US pension fund Bill provides an indicator of the way ahead.