The Legal Limits of ESG in Fiduciary Decision-Making: Transatlantic Perspectives from the US, EU and UK

This article provides a comparative analysis of how environmental, social, and governance (ESG) considerations intersect with fiduciary duties in the US, EU, and UK, encompassing common law and civil law traditions. It examines the extent to which ESG objectives align with or obfuscate duties of good faith under each jurisdiction’s regulatory framework. The EU emerges as the most prescriptive, with a robust regime that embeds ESG responsibilities and exposes fiduciaries to potential liability for failing to integrate them. By contrast, the US presents a fragmented and politically polarized landscape. In pro-ESG states, fiduciaries are largely shielded when incorporating ESG factors, whereas in anti-ESG states, they may face liability for doing so, effectively reversing conventional fiduciary risk. The UK occupies an intermediate position, pursuing strategic reforms to align sustainable finance with EU standards while preserving fiduciaries’ discretion. Liability regimes diverge: enforceable obligations exist in the EU, while contractual autonomy and shareholder primacy in the UK and pro-ESG US states mitigate enforcement risks. Across these jurisdictions, the absence of punitive measures makes nonintegration unlikely to trigger liability. This comparative inquiry reveals the intricate, often conflicting legal topographies shaping fiduciary accountability in the era of ESG.