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Abstract
The ESG Movement is one of the most potent forces affecting the investment world today. (ESG stands for "environmental/social/gover-nance" and it is the latest iteration of the long-established Corporate Social Responsibility (ČSR) movement. ESG has been embraced by managers of some of the world's largest pension plan administration companies, such as BlackRock. The goal of the Movement is to pressure boards of directors and top management of companies where pension plan managers own significant shares of stock into doing what these pension plan managers consider to be "the right thing", even if the actions they promote result in less profitability for those companies, at least in the short run. (Stockholders are not generally considered to owe fiduciary duties to the companies in which they own stock. Pension plan managers, however, are fiduciaries of the beneficiaries of their respective pension plans. How does being a fiduciary harmonize to being a promoter of ESG when following the tenets of that Movement can result in less profitability for the plans they manage? The Trump Administration has expressed doubt over the legality of ESG-motivated actions as they relate to federally-regulated qualified pension plans subject to the Employee Retirement Income Security Act of 1974 (ERISA). (According to an Administration Executive Order, the fiduciary duty of a pension plan manager subject to ERISA is to "maximize" profits for the plan beneficiaries. (This paper will discuss the origins and precepts of the ESG Movement, the fiduciary responsibilities of pension plan trustees, the concerns of ESG proponents that making profits at the expense of the planet and the health of the global population is counter-productive, and arguments about whether ERISA mandates fiduciaries to maximize profits.
I.INTRODUCTION
The Environmental, Social and Governance (ESG) movement is one of the most important forces impacting investment strategies today. Some of the largest U.S. mutual fund administrators and pension plan managers are proponents of the Movement. (In 2019, ESG funds attracted over $20 billion in funding from investors.1 The rise of the ESG Movement may have implications for pension plan managers who have fiduciary duties to participants and beneficiaries of the pension plans they administer. Is the responsibility of these pension managers to maximize the benefits of their participants and beneficiaries or should they consider ESG...