New Fiduciary Duties in a Changing Social Environment

Abstract

The next 20 years promise to be interesting ones for pension funds. The Securities and Exchange Commission has altered the fiduciary duties of those holding stock on others' behalf. Its redefinition will become the rule for all fiduciaries whether subject to the SEC's jurisdiction or not. The revised standard will require fiduciaries to factor into their judgments social and corporate responsibility issues. In framing its new regulations, the SEC drew on the experience of the socially screened mutual funds, which offers a framework for implementing the new responsibilities. Pensions must examine the meaning of ownership in the context of shares in corporations. They must address their dual roles as guarantors of benefits and as financial institutions.