ESG criteria and economic democracy: fiduciary duty of administrators and managers of investment funds for sustainable development

Abstract

Given the significant increase of individual investors and the multiplication of sustainable products and services, under the acronym ESG, a study is justified on the legal regulation of the investment funds market, which encompasses both service providers (managers and administrators) and consumers (individuals). The aim is to understand the relationship between democracy and the financial market, in the context of a hyper-complex society and the global market economy, analyzing specifically: (i) - the functioning of the financial market from the theories of Economic Democracy, which reflect decision-making process in business activity; (ii) - the liability of the administrator and manager of investment funds in the incorporation of ESG criteria and the fiduciary duty. The inductive method is employed with the aid of bibliographical research. It is concluded that: 1 - the ASG criteria, representative of the cooperation between State-Company to achieve the Sustainable Development Goals (SDGs), do not contribute directly to the democratization of the financial market, but indirectly, since there is an introduction of cooperation procedures that promote transparency and dialogue, such as disclosure, which publicly address environmental, social and governance issues, essential themes for democracy in the current molds; 2 - legal responsibility on the incorporation of ESG criteria and the choice of assets should not be limited to the risk-return criterion, since there is a new regulatory universe that applies to the actions of investment fund managers/administrators, such as transnational standards, which include a new ethics aimed at SDGs, which are complementary to traditional fiduciary duties.