Department of Labor Issues Proposed Rule on ESG Investing
Highlights
The DOL’s Proposed Rule makes ESG investing more challenging for plan fiduciaries.
Fiduciaries may only consider pecuniary factors in selecting investments and investment courses of action.
ESG factors may be considered if they constitute material economic considerations. An ESG fund may not be a qualified default investment alternative.
Retirement plan participants and fiduciaries continue to express heightened interest in investing in environmental, social and governance (ESG) funds. ESG funds are generally funds featuring one or more environmental, social, governance, or similarly oriented assessments or judgments in their investment mandates. Plan fiduciaries responsible for investment decisions often explore ways to select ESG funds while still satisfying their fiduciary duties under ERISA.
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