The planetary trust: a flawed instrument of intergenerational equity Brown Weiss’s Planetary Trust concept is significant in that it presents a potential instrumental means for facilitating equity between generations. This section begins by outlining Brown Weiss’s Planetary Trust concept, setting it within the context of trust law more generally. It then presents a critique of the Planetary Trust on both a theoretical and practical level, before comparing the Planetary Trust concept to defined benefit pension funds, noting that any practical incarnation of the Planetary Trust is likely to face many of challenges that have all but defeated defined benefit funds.
The Planetary Trust Concept While a number of theorists have attempted to establish a normative basis for justice between the generations, very few have suggested an instrumental means of governance for achieving justice between generations. An exception is Brown Weiss, whose theory ‘tries to anticipate the norms required to bring about justice between our generation and future generations’ with respect to ‘the natural and cultural patrimony of our planet’.
Brown Weiss has suggested an instrument that legislators could adopt in order to give effect to the theory of intergenerational equity: the ‘Planetary Trust’. It is a normative framework which, if adopted and internalized by our political, economic and social institutions, might enable them to serve as vehicles for ensuring that future generations will inherit their just share of our global heritage. Its thesis is that the human species holds the natural and cultural resources of the planet in trust for all generations of the human species.
The concept is, therefore, based in trust law. Brown Weiss describes the functionality of the Planetary Trust as follows: This Planetary Trust obligates each generation to preserve the diversity of the resource base and to pass the planet on in no worse condition than it receives it.
Thus, the present generation serves both as a trustee for future generations and as a beneficiary of the trust. In fulfilling our role as Planetary Trustees, we can draw on the law of trusts, a body of distilled teachings concerning intergenerational cooperation and conflict, to help resolve the challenges confronting our global heritage. As such, the Planetary Trust institution conceives the entire planet as a trust fund, which must be managed by trustees in the best interests of beneficiaries. Brown Weiss relies, in particular, upon the law of charitable trusts in order to constitute her legal framework for the Planetary Trust. Trust law originated in England as a means for transferring property from one generation of a family to the next, and remains a central feature of common law legal systems today.
As noted in Chapter V, the trust institution was born of conscientious necessity: it was created to overcome situations in which existing legal obligations had failed to protect the property of minors from unscrupulous guardians. Thus from its earliest days, the trust had the makings of a bespoke institution of intergenerational justice. The situations in which this propensity can be realised, of course, are limited by contextual legal requirements. Under trust law in common law jurisdictions, a number of different types of trust exist (for example, expressed, constructive and resulting trusts). Here we will confine ourselves to outlining the law relating to charitable trusts, given Brown Weiss’s focus.
A charitable trust has a number of features. These include the capital of the fund itself, beneficiaries, trustees, an explicit or implicit decision to create the trust, and rules governing the management of the trust. It is worth explaining briefly how each of these requirements is addressed in Brown Weiss’ theory of the Planetary Trust. First, at the heart of a trust fund is the trust property. The property of the Planetary Trust ‘includes both the natural heritage of the planet and the cultural heritage of the human species’.
Second, trustees manage the trust fund on behalf of the beneficiaries. In charitable trusts, the beneficiaries do not need to be specific individuals. Instead, the trust should benefit society, or at least an appreciable and identifiable part of it. The beneficiaries of the Planetary Trust are to be ‘all human generations, born and unborn.’ Third, the trust must have trustees who manage the trust property with a high level of care, according to the requirements of fiduciary duty (described in detail in Chapter III). Under the Planetary Trust ‘each generation acts as trustee for beneficiaries in succeeding generations, just as past generations served as trustees for it’.
Fourth, the purpose of the trust must be clear. The owner of the trust property must manifest an intention that it be held on trust for the beneficiaries. Brown Weiss argues that [t]he Planetary Trust is an inter vivos trust between generations of the human species. Its existence is implicit in the nature of the relationship between generations. It derives from an implied declaration by each generation that it holds the resources of the planet in trust for future generations.
This intention is universally reflected in diverse human cultural and religious traditions. The Planetary Trust concept has several advantages. First, it sets out clearly the intergenerational problems inherent in natural resource management. Second, it emphasises the role that must be played by the current generation in ensuring future generations have access to a range of natural resources of a decent quality, and not just what is left over after thoughtless exploitation by the current generation. Third, and most importantly, it presents a theoretical framework upon which a functional instrument may be designed and managed.
In Robert Merton and Zvi Bodie’s terms, it has a form and function. Despite the elegance of the notion of Planetary Trust in a symbolic sense, however, its practical application, when imagined, appears impossible. Upon closer examination, moreover, the theoretical underpinnings of the concept appear to be unworkable. Critique of the Planetary Trust Concept While Brown Weiss’s institution provides something of a seductive metaphor, the foundational arguments for implying the Planetary Trust are contestable in both their general sense and in their details. Broadly, Brown Weiss’ assumption that all humans intend to hold the planet on trust for all future generations is, of course, utopian.
Her suggestion that this intention is universal and manifest in ‘diverse human cultural and religious traditions’ is, similarly, morally and practically contentious. It relies upon a belief that the regard one generation has for its children is natural in the sense that it is ahistorical and not contingent on culture and society and is repeated one generation to the next by reference to some undefined thread binding humanity. It also assumes the longevity and continuity in the institutional form and function of the trust institution itself. It ignores the fact that behavioural science has shown individuals to be motivated by the local – both in time and space – and fails to question whether conflict within and between societies threatens what uniform moral standards might exist. The details of Brown Weiss’s institution are, if anything, more problematic than its broad strokes.
From a practical perspective, trust law does not exist in most countries outside the common law tradition. Even assuming that countries could overcome this impediment and accept the Planetary Trust institution, there are clear limitations on the extent to which the trust, as an institution, can facilitate intergenerational justice in a coordinated institutional manner, across political, economic, legal and geographic borders. Most importantly, in order for a trust to exist, an individual or group of individuals must want to act as settlors, that is, they must want to create a trust. In the context of the Planetary Trust, the significance of the will or intention of would-be settlors cannot be underestimated. A trust cannot be imposed upon a potential settlor.
Secondly, under the common law, future property (for example expected future inheritance) cannot be owned or held on trust. Thus, trust property must be limited to existing property. It is unlikely that the planet, as an evolving system; a moveable feast, could be so narrowly defined. Finally, idea that a trust as complex as the Planetary Trust Brown Weiss describes could be implied from ‘diverse human cultural and religious traditions’ is so far-fetched that it might be better described as a hopeful rumination than constitutive of an institution. Indeed, it is unclear whether Brown Weiss intended this concept to be taken as anything more than a moral or ethical construct, but she did acknowledge the potential for a more formal institution: [w]hile no affirmative action need be taken to create the Planetary Trust as a moral obligation, to have legal force it must be effectuated by positive law.
Thus, the members of each generation must confer legal status on the trust by enacting and enforcing positive laws affirming their obligation to future generations. Beyond the impracticability of the Planetary Trust concept lies a more serious flaw in the theoretical fabric of the Planetary Trust concept: the notion of the Planetary Trust sidesteps the (real) risk of intergenerational conflict between current and future beneficiaries of the trust. The maintenance of environmental resources for future generations may require the restriction of the current generation’s access to these resources. In such situations, Planetary Trustees would be forced to choose between the interests of their own generation (often vociferously present) and future generations (largely unrepresented). While Brown Weiss notes that the ‘dual role of trustee and beneficiary creates conflicts’, she does not offer a way of transcending this conflict other than evoking (once again) the natural relationship and commitment between one generation and its children.
Even if plausible, in some quarters, it is not adequate as a means of joining generations many years removed, or those who are geographically and culturally distant. Obviously lacking in the Planetary Trust is a means by which people are able to give voice to their interests – assuming they have interests other than the shared welfare of their children. Comparison with defined benefit pension schemes The Planetary Trust institution bears a striking resemblance to funded pension schemes and especially defined benefit pension funds, which have, in recent years, revealed themselves to be largely unsustainable from a financial perspective. These schemes are trust funds set up by companies, organisations, or industries to provide an income to employees and their survivors after they retire. In defined benefit funds, employers agree to set aside a certain portion of employees’ current wages and pay them a certain income upon their retirement.
As a result, employers bear the risks of the invested trust fund; if it underperforms against estimated liabilities, the employer has to reach into its own pocket in order to make up the deficit.In many plans, younger, middle-aged, and older generations of workers co-exist together, paying in their contributions with the employer or sponsor as those retired draw their entitled benefits. It functions well as long as no generation exploits the others, and the background sponsor remains solvent with respect to assumed liabilities and current contributions and obligations. As such, it can be a self-perpetuating trust joining the interests of different generations in their long-term welfare. Like the Planetary Trust concept, pension funds in common law legal systems are based on trust law. They have fund capital (that is, a pool of capital produced by the company or organisation creating the pension scheme), beneficiaries (employees of the company or organisation), trustees, trust purposes, and evidence of the intention of the trust when created.
These elements differ in fact from those Brown Weiss described with respect to the Planetary Trust, but from a conceptual point of view they are closely aligned. For instance, while the current beneficiaries of a defined benefit pension fund are ascertainable, being past or present employees of the company or organisation, the institution functions on the assumption that it will continue to accept new members not yet determined at the time the trust is created. Whereas all people are trustees of the Planetary Trust, the trustees of pension plans are representatives of those participating in the fund. Pension plans are bound by a trust deed; the Planetary Trust is presumably bound by a social contract which may have as much force if implicit as it would have if explicit. In addition to these structural similarities, defined benefit funds face a similar challenge to the Planetary Trust concept with respect to the management of conflicting intergenerational interests within the fund.
It is arguable that the defined benefit pension fund institution has failed in the UK and the US in part because younger generations of workers have not valued the institution as highly as older generations of workers. Where salary-sacrifices have been asked of younger participants, they have opted, more often than not, for alternative forms of retirement saving that favour the short-term over the long-term. By contrast, older workers facing the same claim for resources have opted to make the sacrifices necessary to realise their long-term interests. Thus in general, older participants value the future far more than younger participants. Here, the trust institution contains competing interests which are nominally bound together by a shared commitment to the future.
More subtly but perhaps more insidiously, short-term biases in trustees and asset managers lead them to focus on the short-term performance of a fund (either defined benefit pension fund or Planetary Trust). In practice, this strengthens the position of the generation of beneficiaries that benefits more immediately from the trust fund compared to those set to benefit in the future. Here, there are two options for trust funds with implications for the Planetary Trust. In the absence of common agreement over current sacrifices, the trust institution, through its trustees, may have to override some interests in favour of the notional ‘common good’. If this does not work the state which underwrites the formal status and legitimacy of the trust (in the sense that it facilitates the justice system as a whole) may intervene to enforce the common good, whatever it is determined to be.
By this assessment, the Achilles heel of the Planetary Trust, like defined benefit pension funds, is its vulnerability to government intervention. If we rely on external sources to overcome the tensions within the trust fund, then the purposes of the trust, vested in the responsibilities of its trustees, are less sacrosanct. Granting the possibility that the enforcement of the Planetary Trust would require a government to intervene on behalf of future citizens, would the Planetary Trust be effective as a long-term investor on our behalf? The experience of the Murray Darling Basin suggests that the government would much more reliably intervene on behalf of current generations: its constituency. Next Page – Testing the Planetary Trust Previous Page – VI. Investing in the Future