15 Fall 2021 (the law does not concern itself about trifles), it would appear to be based more on commercial reality than legal principle. It might be a realistic assumption that beneficiaries are unlikely to complain about trifling losses, but it makes an improper incursion into equity and the highest standards expected of fiduciaries. A breach of fiduciary duty might result in harm, or it might not.23 The primary obligation of a fiduciary is to account for its stewardship. Loss is not a pre-requisite for breach of duty. It is even possible that a breach leads to a gain. The primary remedy is to have an account taken, and liability is strict. The size of the loss is relevant to quantifying equitable compensation, not the existence of the breach of duty. There is a complication with the“significant financial detriment” limb of the test in an important second respect. While courts will be reticent to second-guess determinations by trustees on this question, general principles still apply, including the “no-conflict of interest” rule and the duty to properly weigh relevant considerations and discount irrelevant considerations. The 2014 Law Commission Report stated that trustees have discretion in the way that they assess financial detriment, if they apply their minds to the question and take professional advice about it (para. 6.76). The application of the financial detriment test will differ for a trustee depending on whether the decision involves an investment or divestment. In this case, we are concerned with the latter. Considerations other than relative value might include the impact of a highly politicized decision on the prospects of attracting new capital and/or triggering redemptions; market conditions; the investment horizon of the fund; and whether the position was hedging risk in another asset. Ben & Jerry’s The decision by Ben & Jerry’s is well known, so it can be briefly stated. The ice-cream purveyors decided that it was inconsistent with their“values”to sell their product in “Occupied Palestinian Territory.”To that end, they declined to renew the soon-to-expire contract of their Israeli licensee, who manufactures their ice cream in Israel and distributes it in the region. This was a “real world” decision, not a divestment of intangible shares in the financial markets.Yet it has alerted those operating in the financial markets. Many institutional investors in Ben & Jerry’s ultimate parent, Unilever plc, have stewardship or ESG policies, particularly with respect to corporate governance issues. These have come into existence in the twenty years since Ben & Jerry’s was acquired by Unilever. This is because the seminal Myners report,24 published just after the acquisition, kick-started a fundamental reappraisal of investor views on corporate governance. The idea that Ben & Jerry’s, as a subsidiary, has considerable freedom to make non-commercial decisions that reverberate beyond its own activities and were virtually guaranteed to reflect negatively on Unilever, is viewed by many 21st century institutional investors as highly peculiar. The appetite to rectify perceived corporate governance issues has never been greater. At the heart of this is an expectation that power and control will come from the top of the corporate structure, not the bottom. If it is shown that Ben & Jerry’s breached any laws or rules with its decision, that expectation is likely to be supercharged. Unilever is likely to be under great pressure from shareholders to rewind time. Illegality by Ben & Jerry’s may be Unilever’s way out, but the underlying “loose reigns” governance issue has been laid bare for all shareholders to see. They are unlikely to want to see that structural weakness continue. The paradox is that a real-world ESG decision by Ben & Jerry’s to kill off a profitable licence arrangement has only served to increase the investor pressure on Unilever. That pressure also takes its strength from ESG, which gives investors the ultimate weapon of offloading Unilever stock. While not possessing the visceral drama of Aeschylus’ Greek tragedy Agamemnon, in which Queen Clytemnestra murders her husband King Agamemnon in an act of brutal vengeance, the line then uttered resonates here: “As he sinned by the sword, so is death by the sword his atonement.” This is not to advocate that the sword is preferable to the pen, but simply to observe the self-defeating nature of BDS as a corporate policy. For legislators, the case highlights the mischief. The existing law gives shareholders a self-help remedy of disposal of Unilever shares, but this is often after the fact. It does little for the licensee. Effective anti-boycott legislation, drafted in the right way, can be a prophylactic. 23. In Target Holdings v. Redferns [1996] AC 421, a solicitor was still in breach of trust even though the breach ultimately caused no harm. 24. Paul Myners, “Institutional Investment in the United Kingdom: A Review,”March 6, 2001, available at https:// webarchive.nationalarchives.gov.uk/ukgwa/20130129110402/ http://www.hm-treasury.gov.uk/media/2F9/02/31.pdf
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