DOL Final Rule Rolls Back Restrictions on Retirement Plans’ Use of ESG Factors

The U.S. Department of Labor (DOL) issued a final rule that permits fiduciaries for 401(k) and other retirement plans to consider climate change and other environmental, social and governance (ESG) factors when they select plan investments and exercise shareholder rights, such as proxy voting. Critics contend that ESG considerations are outside the traditional financial safety and return-on-investment criteria that should be fiduciary’s sole consideration as required by the Employee Retirement Income Security Act (ERISA) The rule will be effective 60 days after its upcoming publication in the Federal Register except for a delayed applicability until one year after publication for certain proxy-voting provisions to allow fiduciars and investment managers additional time to prepare. . . .