Putting Labor's Capital to Work for Labor : Restoring a Worker-Centric Vision of Fiduciary Duty

This report has two goals: first, to illustrate how the legal concept of fiduciary duty, designed to protect worker retirement funds, has been captured and distorted in ways that harm workers. Second, to propose means of restoring fiduciary duty to its proper purpose. The state-level fiduciary duties addressed in this report govern the investment of up to $10 trillion in assets and directly shape the retirements of 26 million working-class Americans. They are also just about the only source of worker voice in capital markets and corporate boardrooms. That is why a range of powerful business lobbies have distorted the rules that govern them: to undermine worker voice over how pensions are invested. To restore fiduciary duty is to restore that voice to its proper place, to give workers say over the investment of their own retirement funds, and to advance the cause of economic democracy.This report sets out three ways of doing so. The first is to reform state pension codes to make it clear that pension trustees may consider worker interests in making investment choices. The second is to obtain interpretive letters from state attorneys general opining that existing fiduciary duties permit a worker-first view of fiduciary duty, even without legislative reform. The third is to encourage pension trustees to adopt investment policies consistent with a worker-first view of fiduciary duty. This report also includes an appendix setting forth the relevant provisions in the existing state pension codes, interpretive letters, case law, and investment policies of eighteen states I have identified as appropriate targets for pro-worker action