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News

All News > Retirement Plan Investments - ESG

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The Interplay Between ESG Investing and ERISA's Fiduciary Duties
Morgan Lewis Link to more items from this source
Sept. 22, 2022

"The exposure of ESG investing to political reinterpretation adds complexity to retirement plan-related considerations of ESG investing. While the choice to consider certain ESG factors when selecting retirement plan investments may be deemed prudent and loyal under one administration, the guidance could change under the next. ERISA fiduciaries and employers should proceed with caution[.]"

Tags: Fiduciary Duties  •  Retirement Plan Investments - ESG

Practical Tips for Plan Sponsors and ESG Investments
Groom Law Group, via Bloomberg Law Link to more items from this source
Sept. 9, 2022

"Fiduciaries that do choose to consider ESG factors as part of their process ... should be prepared to provide comprehensive documentation demonstrating that they have conducted a review that concludes the inclusion of ESG factors is material to an investment's risk and return profile."

Tags: Retirement Plan Investments - ESG

ESG Investments: Practical Tips for Plan Sponsors
Bloomberg Law Link to more items from this source
Sept. 8, 2022

"In this fast-changing environment, to minimize the risk of lawsuits and DOL investigations based on ERISA's duty of prudence, plan sponsors and fiduciaries considering ESG investments may wish to consider ... [1] Focus on process ... [2] Implement rigorous documentation ... [3] Economics still matter ... [4] Monitor developments."

Tags: Retirement Plan Investments - ESG

Public Pension Funds Overwhelmingly Support ESG
Morningstar; free registration required Link to more items from this source
Aug. 30, 2022

"[A] sample of U.S. state and local municipal defined-benefit public pension funds, which invest on behalf of almost 14 million of their working and retired participants across $3.4 trillion in assets, showed a higher rate of support for almost all of these 72 resolutions compared with support from general shareholders as well as ESG-focused funds."

Tags: Retirement Plan Investments - ESG

Florida Eliminates ESG Considerations from State Pension Investments
Office of Florida Governor Ron DeSantis Link to more items from this source
Aug. 24, 2022

"This update to the fiduciary duties of the SBA's investment fund managers and investment advisors clearly defines the factors fiduciaries are to consider in investment decisions and states that ESG considerations will not be included in the state of Florida's pension investment management practices."

Tags: Retirement Plan Investments - ESG  •  State and Local Government Plans

State Anti-ESG Bills May Complicate Public Retirement Plan Investing
Morgan Lewis Link to more items from this source
Aug. 18, 2022

"[S]ome states are passing legislation that would prohibit the states from doing business with managers who invest based on ESG criteria. These anti-ESG state legislative efforts could complicate the use of ESG by public retirement plans and put retirement plan fiduciaries and providers of retirement plan investment products in a tricky spot, looking to bridge their fiduciary obligations with these new limitations. These legislative activities could also create challenges for investment providers seeking to simultaneously serve both public and private retirement plans."

Tags: Retirement Plan Investments - ESG  •  State and Local Government Plans

ESG Fund Allocations Among New, Do-It-Yourself Defined Contribution Plan Participants
David Blanchett and Zhikun Liu, via SSRN Link to more items from this source
Aug. 17, 2022

"This research explores the allocation decisions of 9,324 newly enrolled DC participants who are self-directing their accounts in a DC plan that offers at least one ESG fund. Overall interest in ESG strategies among these participants is relatively weak, with only 8.9% of participants having any allocation to an ESG fund and average allocations to ESG strategies of only 18.7% among those holding any ESG funds."

Tags: Retirement Plan Investments - ESG

Senators Aim to Reverse DOL Positions on ESG, Crypto Investing
Mercer Link to more items from this source
Aug. 16, 2022

"While unlikely to advance this year with Democrats in charge of Congress, these GOP bills may foreshadow a major effort next year if Republicans take control of either chamber after this fall's midterm elections.... [The Maximize Americans' Retirement Security Act (S 4613)] would amend ERISA to require that plan fiduciaries select investments based 'solely on pecuniary factors,' which are factors expected to have a material effect on an investment's risk and return."

Tags: Retirement Plan Investments - ESG  •  Retirement Plan Policy

How Woke Capital Politicized Your Retirement Account
The Wall Street Journal; subscription may be required Link to more items from this source
[Opinion]
Aug. 15, 2022

"BlackRock and other giant firms use your money to advance ESG ideas you may not agree with, even if you own index funds. Vivek Ramaswamy has brought an alternative to the market."

Tags: Fiduciary Duties  •  Retirement Plan Investments  •  Retirement Plan Investments - ESG

Takeaways from Comments to DOL on Possible Actions to Mitigate Climate-Related Financial Risks
Hall Benefits Law Link to more items from this source
Aug. 11, 2022

"There are four major takeaways from EBSA's collection of public comments on its potential responses to climate-related financial risks. [1] EBSA has not committed to any rulemaking.... [2] Plan fiduciaries [are] concerned about solely focusing on climate risk.... [3] Financial industry groups urge EBSA to limit regulations to ERISA and coordinate with SEC.... [4] ESG rules face similar opposition by industry groups."

Tags: Retirement Plan Investments - ESG

State Attorneys General Question BlackRock on ESG, Antitrust Concerns
planadviser Link to more items from this source
Aug. 10, 2022

"A group of 19 Republican state attorneys general have written a letter to BlackRock stating that the asset manager is using state pension fund assets in environmental, social and governance investments that 'force the phase-out of fossil fuels, increase energy prices, drive inflation and weaken the national security of the United States.' "

Tags: Retirement Plan Investments  •  Retirement Plan Investments - ESG

Editor's Pick State Regulation of ESG Investment Decision-Making by Public Retirement Plans (PDF)
Ropes & Gray LLP Link to more items from this source
Aug. 9, 2022

19 pages. "While many state pension divestment bills expressly exclude managed investment funds and private equity funds, some do not. Some initiatives further require that the pension fund board request that investment fund managers create similar funds without the targeted holdings. Beyond legislation on divestment and state contracts, states are deploying task forces, investigations and report committees to encourage or discourage ESG investing, while some pension funds are adopting their own investment and proxy voting policies that incorporate ESG."

Tags: Retirement Plan Investments - ESG  •  State and Local Government Plans

ESG Investing in Your 401(k) Plan: The Problem Is Choice
Dorsey ERISA Link to more items from this source
[Opinion]
July 27, 2022

"ESG is not a fund category within the risk/return spectrum. It is not specific to equities or bonds or large/mid/small cap stocks or growth or value stocks. Rather, ESG attributes can exist broadly across all investments along the spectrum. There are many more questions here than answers."

Tags: Retirement Plan Investments - ESG

DOL Preparing to Finalize Proposed Regs on ESG Investing and Shareholder Rights
ORBA Link to more items from this source
July 26, 2022

"The DOL received more than 22,000 comment letters for the proposed regulation. Ninety-seven percent of respondents support the proposed changes ... While some respondents asked the DOL to revisit the tie-breaker provision and other specifics of the proposed rule, many respondents agreed that the proposed rule clears the way for fiduciaries to consider adding ESG investment options to benefit plans."

Tags: Retirement Plan Investments - ESG

Retirement Asset Management: Regulatory Update
Groom Law Group Link to more items from this source
[Guidance Overview]
July 7, 2022

"The [SEC] has several initiatives underway related to [ESG] investing, and they are pursuing fundamental changes to the relationship between investors and private fund advisors. The [DOL] ... is preparing to amend [PTE 1984-14], which provides prohibited transaction relief for asset managers that qualify as qualified professional asset managers (QPAMs)."

Tags: Retirement Plan Investments  •  Retirement Plan Investments - ESG

No Longer in Play This Year: California Bills Requiring Divestment by CalPERS and CalSTRS
Pensions & Investments Link to more items from this source
June 27, 2022

"Two California divestment bills, one that would have required CalPERS and CalSTRS to divest from fossil fuels and another from companies with business operations in Russia or Belarus are dead for this session after an Assembly committee chairman declined to schedule the bills for hearings."

Tags: Retirement Plan Investments - ESG  •  State and Local Government Plans

DOL Fiduciary Rewrite, ESG, Form 5500 Proposals Delayed
American Retirement Association [ARA] Link to more items from this source
June 23, 2022

"Based on updates to [DOL's] Spring 2022 regulatory agenda, it appears that stakeholders will have to wait a little longer for the agency's revisions to the definition of fiduciary, as well as final guidance on ESG-based factors and additional Form 5500 changes."

Tags: Fiduciary Duties  •  Reporting to Government Agencies  •  Retirement Plan Investments - ESG

Shareholder Climate Activism Comes for 401(k) Plans: Lessons Learned from Amazon and Comcast (PDF)
Debevoise & Plimpton LLP Link to more items from this source
June 10, 2022

"[L]essons we can learn from the SEC's decision allowing the shareholder proposals to proceed.... [1] Shareholders may solicit through shareholder proposals climate-related compensation information that is beyond the scope of the SEC's proposed climate disclosure rules. [2] Shareholder proposals may be permitted to proceed despite being inconsistent with ERISA."

Tags: Retirement Plan Investments - ESG

DOL Urged to Forgo Retirement Plans' Climate Disclosures
Roll Call Link to more items from this source
June 9, 2022

"Both supporters and opponents of greater disclosure on climate-related financial risk are urging the [DOL] to complete its current agenda before pursuing additional rules to protect retirement savings and pensions from climate risk. Despite differing rationales, parties in opposite camps are urging the department to avoid a scattershot approach that would overlap with the [SEC's] proposed climate risk disclosure rule."

Tags: Retirement Plan Investments - ESG

Retirement Plans: A Battleground for Socially Conscious Investing Efforts?
Morgan Lewis Link to more items from this source
June 8, 2022

"A subset of shareholders have recently increased pressure on large companies to align their retirement plan offerings with their climate agendas.... [S]ome stakeholders are pushing companies to allow shareholders to vote on whether a company should include in its annual proxy statement a report analyzing how its retirement plan options align with its stated climate action goals."

Tags: Retirement Plan Investments - ESG

Some States Ban Pension Plans from Dealing with ESG-Backing Firms
Chief Investment Officer [CIO] Link to more items from this source
May 27, 2022

"In Texas, West Virginia and Kentucky, legislatures have required state funds to limit transactions with companies that divest oil, natural gas and coal, according to news reports. West Virginia and Arkansas recently pulled out pension money run by BlackRock, whose chief has been vocal about fighting climate change. In Texas, a new law prevents state agencies from doing business with companies that the state comptroller determines are 'boycotting' fossil fuels."

Tags: Retirement Plan Investments - ESG  •  State and Local Government Plans

SEC Proposes ESG Disclosures for Investment Advisers and Investment Companies
Dodd-Frank.com Link to more items from this source
[Guidance Overview]
May 27, 2022

"The proposal would require funds that consider ESG factors in their investment process to disclose additional information regarding their strategy. The amount of required disclosure depends on how central ESG factors are to a fund's strategy and follows a 'layered' framework[.]"

Tags: Retirement Plan Investments - ESG

Text of SEC Proposed Rule: Enhanced Disclosures by Certain Investment Advisers and Investment Companies About Environmental, Social, and Governance Investment Practices (PDF)
U.S. Securities and Exchange Commission [SEC] Link to more items from this source
[Official Guidance]
May 26, 2022

362 pages. "The [SEC] is proposing ... to require registered investment advisers, certain advisers that are exempt from registration, registered investment companies, and business development companies, to provide additional information regarding their environmental, social, and governance (ESG) investment practices.... The proposed rules and form amendments are designed to create a consistent, comparable, and decision-useful regulatory framework for ESG advisory services and investment companies to inform and protect investors while facilitating further innovation in this evolving area of the asset management industry."

Tags: Retirement Plan Investments - ESG

SEC Statement on Proposed Rule Requiring Enhanced Disclosure by Certain Investment Advisers and Investment Companies on ESG Investment Practices
U.S. Securities and Exchange Commission [SEC] Link to more items from this source
[Guidance Overview]
May 26, 2022

"[This proposed rule] would require meaningful specific disclosure regarding ESG strategies in registration statements, the management discussion of fund performance in annual reports, and in adviser brochures ... The level of detail required of any given fund or adviser will depend on the extent to which such manager considers ESG factors in its decision-making."

Tags: Retirement Plan Investments - ESG

The Case Against ESG in Retirement Plan Investment Lineups, Part 1
WealthManagement.com Link to more items from this source
May 24, 2022

"Retirement plan sponsors largely are taking a cautious approach to ESG.... Fewer than 1/3 of plans reported that they have either implemented or are planning to implement some level of ESG considerations into their investment process/ investment due diligence. Over half of respondents reported having conducted ESG education over the last two years. About 1/3 of plans noted a lack of evidence of ESG performance as impacting their willingness to consider ESG."

Tags: Retirement Plan Investments - ESG

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