03 Apr PUBLIC PENSION CORNER, #38: Fiduciary Duty in Civlizational Context
NEWS:
I. ESG Funds Struggled in 2025
New data from Morningstar show that ESG funds struggled mightily in 2025, with the third straight year of net redemptions and with significant fund closures:
Investors continued to withdraw from US sustainable funds in 2025, marking the third consecutive calendar year of outflows and the worst year on record since Morningstar began keeping track more than 10 years ago….
US investors redeemed roughly $4.6 billion from sustainable funds in 2025’s fourth quarter, driving total annual outflows to about $21 billion last year. Annual outflows were slightly worse than in 2024, when the segment shed just under $20 billion….
Closures of US sustainable funds continued to outpace launches throughout 2025, extending a trend that began in late 2023. Over the year, only nine new funds were launched, while 91 funds closed, highlighting the ongoing consolidation and subdued product development in the sustainable fund landscape.
II. The Church of England Announces its Stewardship Priorities
The Church of England Pension Board has declared that it will use its shares to vote against the directors at banks that it believes have violated their previous climate pledges, reinforcing climate as a fundamental part of its investment strategy:
The pension fund for Anglican clergy has pledged to vote against board directors at NatWest, Santander and HSBC, as it accused the banks of having “materially backtracked” on their climate commitments.
The move is the latest sign of how pension funds are continuing to grapple with rising climate risks, even as many major companies including big banks have retreated from previous undertakings.
The Church of England Pensions Board, which oversees £3.5bn in assets, said climate change and nature loss were “systemic risks”. The major banks in its sights at upcoming investor meetings had “weakened climate-related policies, diluted financing targets for sensitive sectors or stepped back from previously stated commitments”.
COMMENTARY
By Stephen R. Soukup, President and Publisher, The Political Forum
“Fiduciary Duty in Civlizational Context”
I know that financial markets are closed today and, relatedly, that this is a long and important weekend for many. Accordingly, I will be brief(ish).
I have long believed and argued that the stories, myths, parables, and fables that a society tells itself and passes along to its children are incredibly important, as they instill in the members of that society the virtues and ideas considered most important. As I put it in a piece about the Business Roundtable’s decision to redefine the purpose of a corporation almost seven years ago:
Jesus and Cicero didn’t tell parables because they were crazy old codgers who liked to see people’s reactions or hear their laughter. Aesop didn’t tell fables because they made him feel warm and fuzzy inside. All of these people – and countless others, of course – told these tales and pushed these morals because they mattered, because this was, is, and ever shall be the best means by which to inculcate every generation with the ideas, values, and norms that matter to a society. As Aristotle and C.S. Lewis remind us, the little human animal must be taught the virtues that are important. For if he is not, he will not develop those virtues and he will never understand, much less enjoy the good life.
To that end, today, I will share two stories, one a parable, and the other a fable. Although the first is religious in origin, as the second demonstrates, the ideas undergirding its point/moral are not strictly religious. Together, these two stories demonstrate that the ideas that animate this newsletter and form the foundation of “fiduciary duties” as we know them today are longstanding and integral parts of our shared civilization ethos, and moreover, that they have both religious and secular origins and applications.
First up is “The Parable of the Talents,” Matthew 25: 14-30.
“It will be as when a man who was going on a journey* called in his servants and entrusted his possessions to them.
To one he gave five talents;* to another, two; to a third, one—to each according to his ability. Then he went away. Immediately the one who received five talents went and traded with them, and made another five.
Likewise, the one who received two made another two.
But the man who received one went off and dug a hole in the ground and buried his master’s money.
After a long time the master of those servants came back and settled accounts with them.
The one who had received five talents came forward bringing the additional five.* He said, ‘Master, you gave me five talents. See, I have made five more.’
His master said to him, ‘Well done, my good and faithful servant. Since you were faithful in small matters, I will give you great responsibilities. Come, share your master’s joy.’
[Then] the one who had received two talents also came forward and said, ‘Master, you gave me two talents. See, I have made two more.
His master said to him, ‘Well done, my good and faithful servant. Since you were faithful in small matters, I will give you great responsibilities. Come, share your master’s joy.’
Then the one who had received the one talent came forward and said, ‘Master, I knew you were a demanding person, harvesting where you did not plant and gathering where you did not scatter;
And so out of fear I went off and buried your talent in the ground. Here it is back.’
His master said to him in reply, ‘You wicked, lazy servant!* So you knew that I harvest where I did not plant and gather where I did not scatter?
Should you not then have put my money in the bank so that I could have got it back with interest on my return?
Now then! Take the talent from him and give it to the one with ten.
For to everyone who has, more will be given and he will grow rich; but from the one who has not, even what he has will be taken away.
And throw this useless servant into the darkness outside, where there will be wailing and grinding of teeth.’”
The moral of the story here is pretty clear. No need for me to prattle on about it.
The second story is a little different but hits on similar themes. Aesop’s “The Dog in the Manger”:
A Dog asleep in a manger filled with hay, was awakened by the Cattle, which came in tired and hungry from working in the field. But the Dog would not let them get near the manger, and snarled and snapped as if it were filled with the best of meat and bones, all for himself.
The Cattle looked at the Dog in disgust. “How selfish he is!” said one. “He cannot eat the hay and yet he will not let us eat it who are so hungry for it!”
Now the farmer came in. When he saw how the Dog was acting, he seized a stick and drove him out of the stable with many a blow for his selfish behavior.
This fable captures something distinct from the Parable of the Talents. Whereas the buried-talent servant fails through timidity and inaction, the Dog in the Manger fails through a kind of possessive obstruction. There is a powerful ESG analogy here. When fiduciaries deploy their clients’ capital to suboptimal ends – by supporting corporate DEI, for example, or divesting from fossil fuel stocks, or by engaging with and encouraging corporations to focus on non-pecuniary, politicized goals – they are behaving like the dog, keeping the cattle from the hay. They are, in short, preventing their beneficiaries from fully enjoying that which is rightfully theirs. Like the dog, they may not be acting maliciously (or ideologically), but by operating on their instincts, they nevertheless deprive their beneficiaries of what they should rightly have.
In any case, all of this is profoundly embedded in our civilizational history. What fiduciaries are called to do is never easy or uncomplicated, but it’s immeasurably important.
Enjoy your weekend. See you next time.
