Regulatory Outlook | 06.24.20
DOL Proposal Reinforces Fiduciary Role in ESG Investing
Under a proposed rule published Tuesday by the U.S. Department of Labor (DOL), ERISA plan fiduciaries cannot invest in ESG vehicles that sacrifice investment returns or take on additional risk. "Private employer-sponsored retirement plans are not vehicles for furthering social goals or policy objectives that are not in the financial interest of the plan," Labor Secretary Eugene Scalia said. "Rather, ERISA plans should be managed with unwavering focus on a single, very important social goal: providing for the retirement security of American workers." The proposed rule would add regulatory text that makes clear that ERISA requires plan fiduciaries to select investments "based on financial considerations relevant to the risk-adjusted economic value of a particular investment or investment course of action," according to a DOL fact sheet. Scalia further explains his reasoning on the proposed rule in a Wall Street Journal opinion piece.
Read the full article on Pensions & Investments.