What a difference a decade makes 25

‘If owners of private capital have no other information about climate risk, knowledge of the temperature alignment of their assets and portfolios will be vital for prudent stewardship. Knowledge of the potential impact on the value of assets of climate change is clearly consistent with fiduciary duty of preservation of value of capital which is a duty of care set out in trust laws throughout common law jurisdictions. ’

TCFD, Climate Risk and Private Capital ISICI, 2022 The operating environment for those servicing private wealth has changed beyond recognition in the last 10 years or more. The above statement, published in the summer of 2022, implying that transposing some of the global climate change regulations to the private wealth sector might be no bad thing caused not a murmur of dissent. Making a similar suggestion 15 years ago might have seen the author run out of town. But we do believe that a lite touch lift or ‘cherry picking’ of a few elements of the TCFD requirements around the calculation of climate change metrics is a sensible route for private wealth. In the last decade or more there have been several significant waves of new regulation. • The generic increasing prudential and conduct regulatory requirements in response to the global financial crisis. • Significant ratcheting up of AML rules and regulations and supervision of the offshore centres. • A raft of new global tax transparency reporting requirements. All this change occurred against a cultural backdrop that moved away from principles to rules based (and an accompanying increased reporting burden) making of financial regulation as a result of the dominance of EU thinking. Against this backdrop, the role of quality fiduciaries has grown, necessarily so, into a broader 'advisory' role. The general investing environment has changed in other ways too. Culturally the sustainable finance movement has had a big impact on client concerns and objectives, particularly so in the area of private wealth where beneficial owners have perhaps the good fortune to be able to consider such issues. This change sees the fiduciary, at least those qualified and able, to take on a trusted advisor role and be able to engage productively in a discussion of the motives and objectives of those with significant private wealth for whom deploying capital with, and/or for a purpose is a prime concern. Given the backdrop of so much regulatory change, it would be a welcome development if 21st Century Fiduciary Duty were to be defined by practitioners rather regulation. Thus, we have laid out a proportionate framework setting out working practices and guidance that can be defined in more detail by professional consensus.

'If owners of private capital have no other information about climate risk, knowledge of the emissions intensity of their assets and portfolios is vital for prudent stewardship. '