Ian: What you write is spot on: “once environmental variability is scientifically established, decision-makers cannot rely on frameworks that pretend it isn’t there.”
In other words: banks, investment funds, pension schemes, and other fiduciaries (and courts enforcing fiduciary duties) can no longer assume that diversification of investments is enough to minimize risks and maximize returns. They have to take into account that if we keep doing business-as-usual, the system is subject to a risk of tipping and collapse. Their investment allocation and management must therefore be geared towards maintaining the stability of the system. That means transitioning to clean energy and industry, sustainable practices, and nature preservation. Because without those, we (and our economy) cannot survive.
I think the beauty of the principles of fiduciary duties is that they actually already accommodate this – and indeed require this – because fiduciaries have to do what is in the best interest of beneficiaries, including future beneficiaries. In other words, the obligation to allocate and manage investments in a way that restores and maintains economic system stability (and therefore Earth system stability) follows from current, well-established principles of fiduciary duties and needs no new legislation.
Courts can and should enforce that *already today*. We discuss this in our paper "Sustainable Fiduciary Duties for Investors -- How fiduciary duties can be a key to escape the climate prisoner’s dilemma", https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4962416
Let’s hope that this is confirmed in the recently filed case of Hirji et al v Canada Pension Plan Investment Board, File CV-25-00754169-0000 (application of 23 October 2025).
Ian, thanks for laying this out so well and connecting the dots in such a way that I could comprehend much of the complexity of these systems you were describing. Of course it would all boil down (no pun intended) to the modification of a formula before a clearer Big Picture can be brought into focus.
Another formidable challenge will be to change all of the mindsets dependent on ΔS as quickly as possible so that the energies available to the financial systems can be put behind collecting the metrics required to navigate through these crazy times. Once money is threatened, no cost is too great to preserve the flows.
Ian: What you write is spot on: “once environmental variability is scientifically established, decision-makers cannot rely on frameworks that pretend it isn’t there.”
In other words: banks, investment funds, pension schemes, and other fiduciaries (and courts enforcing fiduciary duties) can no longer assume that diversification of investments is enough to minimize risks and maximize returns. They have to take into account that if we keep doing business-as-usual, the system is subject to a risk of tipping and collapse. Their investment allocation and management must therefore be geared towards maintaining the stability of the system. That means transitioning to clean energy and industry, sustainable practices, and nature preservation. Because without those, we (and our economy) cannot survive.
I think the beauty of the principles of fiduciary duties is that they actually already accommodate this – and indeed require this – because fiduciaries have to do what is in the best interest of beneficiaries, including future beneficiaries. In other words, the obligation to allocate and manage investments in a way that restores and maintains economic system stability (and therefore Earth system stability) follows from current, well-established principles of fiduciary duties and needs no new legislation.
Courts can and should enforce that *already today*. We discuss this in our paper "Sustainable Fiduciary Duties for Investors -- How fiduciary duties can be a key to escape the climate prisoner’s dilemma", https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4962416
Let’s hope that this is confirmed in the recently filed case of Hirji et al v Canada Pension Plan Investment Board, File CV-25-00754169-0000 (application of 23 October 2025).
Thank you, Maurits, for the support and encouragement.
Yet again - utter brilliance and eloquence.
Ian, thanks for laying this out so well and connecting the dots in such a way that I could comprehend much of the complexity of these systems you were describing. Of course it would all boil down (no pun intended) to the modification of a formula before a clearer Big Picture can be brought into focus.
Another formidable challenge will be to change all of the mindsets dependent on ΔS as quickly as possible so that the energies available to the financial systems can be put behind collecting the metrics required to navigate through these crazy times. Once money is threatened, no cost is too great to preserve the flows.