The DOL’s Latest Guidance on ESG Investing and Proxy Voting: Key Implications for Plan Fiduciaries

Ropes & Gray

In the latest installment of our Ropes & Gray podcast series addressing emerging issues for fiduciaries of 401(k) and 403(b) plans to consider, Josh Lichtenstein, head of the ERISA fiduciary practice, Ellen Benson, benefits consulting group principal, and Sharon Remmer, ERISA and benefits counsel, analyze the Department of Labor’s (“DOL”) recently amended regulation governing ERISA investment duties and its application to environmental, social, and corporate governance (“ESG”) considerations and proxy voting. The amended regulation generally adheres to the re-proposal the DOL introduced over a year ago, in that it removes the anti-ESG bias of the Trump Administration’s prior rule. Instead, the final regulation adopts a more neutral stance which recognizes that ESG factors may be relevant to a risk-and-return analysis to the same extent as any other relevant factor. This shift in policy, as well as the changes that the regulation makes with respect to exercises of shareholder rights, is likely to have important consequences on fiduciary decision-making and behavior.

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