Department of Labor issues final rule on ESG and ERISA (2022)
| Environmental, social, and corporate governance |
|---|
|
| • What is ESG? • Enacted ESG legislation • Arguments for and against ESG • Opposition to ESG • Federal ESG rules • ESG legislation tracker • Economy and Society: Ballotpedia's weekly ESG newsletter |
For most of the Biden presidency, the Department of Labor has been working on a final rule addressing the use of ESG in Employee Retirement Income Security Act (ERISA)-governed retirement plans. That final rule was released November 22. According to the Wall Street Journal:
| “ |
More retirement savers could soon have the option to invest in funds based on environmental, social and governance principles, under final regulations issued by the Labor Department on Tuesday. The new rule reverses a move by the Trump administration in 2020 that made it harder for 401(k) plans to put ESG investments on the menu. That regulation went into effect shortly before President Biden took office, but the administration moved to replace it. “Today’s rule clarifies that retirement plan fiduciaries can take into account the potential financial benefits of investing in companies committed to positive environmental, social and governance actions,” when selecting 401(k) investments and exercising proxy voting, Labor Secretary Marty Walsh said…. Relatively few 401(k) plans offer ESG investments, in part because of regulatory changes from one administration to the next. Lisa Gomez, assistant secretary for the Labor Department’s Employee Benefits Security Administration, said regulators heard from 401(k) plan sponsors and others in the retirement industry that the Trump-era regulation “had a chilling effect on being able to consider climate change and other ESG factors in making decisions” about investment offerings. The new rule allows employers to consider climate change and other environmental, social and governance effects when selecting 401(k) investments and exercising shareholder rights, such as proxy voting, she said. Employers must put the financial interests of employees first and cannot sacrifice potential returns for these goals, she added. Currently, 13% of 401(k) plans offer socially responsible investment options to employees, according to data that Vanguard Group publishes on the 401(k) plans it administers. Demand for such investments in 401(k) plans is likely to grow, especially from younger workers, industry observers said…. The Biden administration rule will go into effect 60 days after its publication in the Federal Register, which should happen soon, said Ms. Gomez.[1] |
” |
See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
Footnotes
- ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
| |||||||||||||||||||||||
