Lead corporate lawyer Alice Garton closed the first day of Faith in Finance in Switzerland, urging faith leaders to use their financial leverage to safeguard the climate.
Addressing financial representatives from the world’s five major faiths, Alice made the case for them to protect “the operating system we all share”.
Those who manage money for others are bound by fiduciary duties. For faith investors, she said, that responsibility is compounded:
“A faith investor is duty-bound to avoid a particular investment that conflicts with its charitable aims.”
Given the climate-intensified destruction present in so many continents today, this must cause faith leaders to question their investments in fossil fuels.
Fiduciary duty the “highest standard of care known to the law”
Alice made clear what financial leaders’ legal duties are when it comes to climate change and highlighted that the law is “no longer a barrier” to climate progress in business. On the contrary, it is an enabler:
“It’s not the law that has changed,” she said. “It’s the nature of climate change. It has evolved from an ethical issue, to a financial one.”
The evidence that climate change is affecting portfolio value and future business outlook is abundant. Alice cited multiple reports and climate-based court cases against fossil fuel majors, but pointed out a lack of awareness, even among financial experts, of what is at stake.
The financial impacts of climate change mean managing the risks its poses “fits squarely within the narrowest definition of your existing fiduciary duty.”
Alice encouraged the audience to rigorously examine their fossil fuel investments, to consider how effective their engagement strategies are, and to cut and run if these corporations are insisting they can continue with “business as usual”.
Above all, she urged financial leaders to have a little more conversation – between “the person in charge of the money and the person in charge of sustainability”; between financial leaders and “appropriately qualified advisors”; between lawyers and accountants.
Alice closed with a reminder of these leaders’ singular responsibility to take these duties seriously:
“As the financial arm of religions who have taught us to take seriously our stewardship of the planet, you occupy a unique and powerful position.”
The two-day meeting, run by the Alliance of Religions and Faith in Conservation (ARC) is taking place in Zug.