Fiduciary responsibility of company

Definition of ‘fiduciary responsibility’

A fiduciary responsibility is a duty of trust and care towards one or more constituencies. It describes direction of accountability in that one party has a fiduciary duty to another.

Traditionally, the fiduciary duty of directors in public companies is to act in the economic interests of shareholders who invest in the company but are unable to manage the company directly.


The case for company extending fiduciary responsibility

1. It clearly demonstrates that the company values the community of which it considers itself a part.

2. It would help to maintain and manage its local reputation, which is important in business.

3. To broaden the fiduciary responsibility would be an important part of the risk management strategy, especially with regard to risks that could arise from the actions of local stakeholders.

4. It could be argued that there is a moral case for all organisations to include other stakeholders’ claims in their strategies as it enfranchises and captures the views of those affected by an organisation’s policies and actions.



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