Something to Get ESGcited About? DOL Finalizes ERISA ESG and Proxy-Related Rules

The U.S. Department of Labor (DOL) released its final Regulation (the “Regulation”) relating to the prudence and loyalty duties under the fiduciary rules of the Employee Retirement Income Security Act of 1974 (“ERISA”), including the consideration of environmental, social and governance (“ESG”) factors in investment decisions, and to the voting of proxies for accounts subject to ERISA. Given the interest in the topic, today’s release has already generated interest in the mainstream press and we would expect that many market participants and policy makers will find this development significant.

The Regulation finalizes the Biden Administration’s 2021 proposal (“Proposal”) which primarily intended to address the appropriateness of considering ESG factors in connection with investment decisions by fiduciaries of employee benefit plans subject to ERISA. The Proposal, background information about which may be found at More ESGcitement From the DOL – New Proposed Investment/Proxy ERISA Regulations comes following the adoption of a set of related guidance from the Trump Administration, background about which may be found here An ESGplanation of ERISA's New Regulation on Social Investing, and itself follows years of competing sub-regulatory guidance.

While we expect to be providing more detailed analysis in the future, we wanted to provide the links to the DOL Press Release, Fact Sheet and text of Regulation:  

Press Release: https://www.dol.gov/newsroom/releases/ebsa/ebsa20221122

Fact Sheet: https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/final-rule-on-prudence-and-loyalty-in-selecting-plan-investments-and-exercising-shareholder-rights

Text of the Regulation: https://www.dol.gov/sites/dolgov/files/ebsa/temporary-postings/prudence-and-loyalty-in-selecting-plan-investments-and-exercising-shareholder-rights-final-rule.pdf