DOL Greenlights Broader ESG Use in 401(k) Plans

November 22, 2022

thinkadvisor.com

by John Manganaro

On Tuesday, the U.S. Department of Labor published a final regulation aimed at easing the concerns of retirement plan fiduciaries as they review, select and maintain ESG-focused investments within employer sponsored retirement plans.

According to a DOL statement, the purpose of the final regulation is to better allow plan fiduciaries to consider climate change and other environmental, social and governance factors when they select retirement investments and exercise shareholder rights, such as proxy voting.

In the statement, Secretary of Labor Marty Walsh says the final regulation has been developed through extensive consultations and feedback from a wide range of stakeholders. He says the public and industry feedback received by the DOL allowed it to concluded that two related rules issued in 2020 during the prior administration “unnecessarily restrained” plan fiduciaries’ ability to weigh such ESG factors when choosing investments — even when those factors would benefit plan participants financially. [READ MORE]