June 17, 2020

Brad Campbell Discusses the DOL’s Review of ESG Funds in Retirement Plans

InvestmentNews

In the article “Labor Department gathers information on how retirement plans use ESG funds,” InvestmentNews reports the Department of Labor (DOL) is examining the use of environmental, social and governance (ESG) in retirement plans governed by the Employee Retirement Income Security Act, such as 401(k) programs. The industry publication turned to benefits & executive compensation partner Brad Campbell for insight into the DOL’s inquiries.

According to InvestmentNews, the DOL has launched the information search while a proposed rule, “Financial Factors in Selecting Plan Investments,” awaits approval by the Office of Management and Budget. Many observers anticipate that the rule will focus in part on ESG investments.

Campbell told InvestmentNews that “Our speculation is that they’re collecting this information to inform a rulemaking about how fiduciaries should consider ESG-themed investments. It may also include fiduciary issues related to proxy voting.”

The publication reports the most recent DOL directive on ESG came in a 2018 field assistance bulletin. Other administrations also have offered guidance on this topic.

“They’re elevating what has been dueling guidance to a new regulatory requirement,” said Campbell.

Campbell added that “they’re really up against the clock on finalizing regulations,” as it could be months before a final ESG rule is promulgated.

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