6 legal ways to address the climate crisis
Bank of Nature makes the case for beneficiaries to sue their own pension plans
Any 25-year-old new hire today whose compensation includes pension benefits upon retirement is looking forward to 2062 when they can collect monthly checks and enjoy their “third act” — as their reward for a dedicated career.
It’s a contract with their pension fund. At Bank of Nature, we want to substantiate that contract and its implications in directing vast fiduciary money toward climate security — and a future worth retiring into.
As a basic operational function, pension funds must generate interest income from investments that is sufficient to keep the funds vital and able to write checks to beneficiaries month-after-month. The longest-lived new hire today could still be playing bocci ball by 2100, if the climate allows.
We argue that, to maintain a fiduciary’s duty, it matters how that interest income is earned and from where.
Best possible returns, a pillar of fiduciary duty, must be qualified. Interest earned from fossil fuel investments, or investments that diminish our climate future, is not fiduciary — and is a breach of fiduciary duty.
To change the investment behaviors of the world’s largest savings funds toward enterprises that add value, rather than discount, our common future, we argue that beneficiaries of retirement funds can sue their own pension fiduciaries on the grounds of:
Fiduciary duty: How do pensions’ unique fiduciary duties, which extend across generations, impact their evaluation of fund investment strategies? Should it include planet-scale value concerns such as the climate crisis?
Public nuisance: In limiting investment to those known to be ineffective in addressing climate-related damage to beneficiaries’ property, reducing the value of their benefits, do pensions create a public nuisance? Do asset managers like Black Rock, Vanguard and others?
Product liability: Are pensions sold dangerously defective products in the form of investment vehicles that cannot deliver the promised returns?
Public trust doctrine: Does the transfer of control of public pension funds to the asset management industry violate the public trust doctrine?
Breach of contract: Do pensions breach their contract with beneficiaries in neglecting and contributing to climate catastrophe? Do asset managers do the same?
6. Financial fraud: Is fraud committed in the knowing transfer of pension funds to investment vehicles which cannot meet their promised delivery or known goals?
Bank of Nature argues that the law is underutilized as a vector for scale change – especially as a way to affect climate security. In particular, global pension/retirement funds – an aggregated $56-trillion fund with a defined contract to the future – carry an unfulfilled fiduciary obligation to their beneficiaries.
In our “Beneficiary v. Pension Fund” strategy, we explore new legal theories that put fiduciaries on notice: Pensions funds, endowments and other trusts that engage in climate-dimming investments today are incurring legal liability to their own beneficiaries living with the climate consequences of those investments.
We propose there is an "Untaken Safer Alternative" – embodied by Bank of Nature – that fulfils their fiduciary duty and stewardship missions and indemnifies them against future claims.
Please join us for a legal charrette with other environmental and fiduciary legal thinkers September 23, 2022. On Zoom. Free to register. Email ian@bankofnature.eco. More:
