Regulatory Outlook | 08.11.20
Industry Sounds Off Against DOL Proposal on ESG
A DOL proposal that would likely curb ESG investments in ERISA plans has drawn sharp criticism from the retirement community. In a 30-day comment period that concluded July 30, stakeholders roundly admonished the Labor Department's proposal to add regulatory text that makes clear that ERISA requires plan fiduciaries in both private defined benefit and defined contribution plans to select investments "based on financial considerations relevant to the risk-adjusted economic value of a particular investment or investment course of action," as stated in a Labor Department fact sheet. Broadly, stakeholders said the Labor Department did not sufficiently justify its reasoning behind the proposal and that the proposal would create barriers for considering ESG risks; add to fiduciary confusion regarding if and when ESG factors may be considered material; and lead to increased documentation costs.
Read the full article on Pensions & Investments.