Campaign group ShareAction has again called for the fiduciary duties of trustees to be enshrined into law, publishing a draft bill it says would achieve the goal.

The proposed Responsible Investment Bill is meant to “illustrate how specific policy proposals might be enacted”, according to the group, which argued responsible investment could secure environmental and societal benefits.

It said the bill aimed to clear any obstacles “real or perceived” to long-term investment.

“It is envisaged that the whole package of primary and secondary legislation would come into force on the same date – a Responsible Investment Day,” the group added.

The call for legislation comes after Law Commission decided against the codification of pension trustees’ fiduciary duties, instead advocating greater distinction between financial and non-financial factors, as well as a regulatory code of conduct on long-term investing. 

The commission’s preference for guidance over legislation has already been criticised by responsible investment association UKSIF, with its chief executive Simon Howard previously arguing that legal underpinning would have been the most effective way to protect pension savings, and a “much stronger statement” of the government’s commitment to long-term investment.

ShareAction’s draft law proposed enacting some of the Kay Review’s recommendations, suggesting no investment agreement would be able to exclude or restrict the fiduciary responsibilities of trustees.

It also suggested trustees should have the clear ability to act in a member’s “enlightened self-interest”.

It explained that such a clause would allow trustee boards to take action unilaterally if the fiduciary considered such action would not result in “significant” financial detriment to members.

“In essence, we propose retaining the core fiduciary principle of undivided loyalty to the beneficiaries but call for a broader interpretation of beneficiaries’ ‘best interests’ and for more accountability to, and participation by, beneficiaries,” the group added.

It also criticised that contract-based pension provision, offered by insurance companies, was currently subject to “materially weaker” governance standards, as it was only subject to the Financial Conduct Authority’s (FCA) requirement to “balance” a firm’s interests with those of scheme members.

The UK government has proposed addressing the inequality through the introduction of independent governance committees for contract-based arrangements.

The Labour opposition’s shadow pensions minister, Gregg McClymont, stressed the importance of managing pension savings responsibly and noted that the FCA was about to consult on the matter.

“There is no justification for the governance requirements to be watered down in comparison with what is required for trust-based schemes,” he said.

“ShareAction is right to say all workplace pension providers should have a fiduciary duty to scheme members.”

ShareAction’s draft bill comes after the UK’s sole Green Party MP failed to make amendments to what would have led to a “piecemeal” overhaul of fiduciary duties, according to pensions minister Steve Webb.

A Labour MP later called for a codification of fiduciary duties, as well as for asset managers to be required to disclose voting records – an idea embraced by ShareAction in its proposed regulatory guidance for the responsible investment bill.