The Fiduciary Code of Capital and Climate Change

Fiduciary law is part of the “code” for the management of capital, as Katharina Pistor has conceptualized law. Climate activists, attorneys, investors, and international organisations have turned to fiduciary law for legal solutions to the ongoing problem of inadequate corporate and state action in response to climate change. Our thesis is that the turn to fiduciary law by norm entrepreneurs is an attempt to encode a concern for climate change within the management of capital. We make two contributions to the literature on private law and climate change. First, we rigorously identify the features of fiduciary law that make it a vehicle for targeting the relatively small number of “superagents” (states, state-owned enterprises, and transnational private firms) that are primarily responsible for climate change. Second, we identify the barriers to successful use of fiduciary law to encode climate risks into the management of capital, which we call the sword and shield problem, the legitimacy trap, and the interface problem. To test our theory, we contrast developments in the U.S. and EU and in so doing shed light on debates about Environmental, Social, and Governance (ESG) initiatives, corporate responsibility, and state responses to climate advocacy.