New Administration to Review Retirement Plan ESG Investments Guidance
On his first day in office President Biden issued an Executive Order entitled Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis. Included within the Order was what was described as a “non-exclusive” list of federal agency actions that will be reviewed for possible revision or withdrawal. Of particular interest on this list are recent Department of Labor final regulations issued under the title, Financial Factors in Selecting Plan Investments, which became effective on January 12, 2021.
This guidance is viewed by some as discouraging fiduciaries from considering environmental, social, and governance (ESG) factors when choosing retirement plan investments. It establishes in regulations parameters that fiduciaries must consider when selecting investments; for example, evaluating plan investments solely on financial factors and ensuring that participant interests are considered ahead of unrelated objectives. Further Biden administration action on this and other recent federal agency guidance of relevance will be closely monitored.