DOL ESG Investments

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Ernie Guerriero, CLU®,ChFC®,CEBS,CPCU®,CPC®,CMS,AIF®,RICP®,CPFA

The DOL recently (June 23, 2020) updated its “investment duties” regulation to provide further guidance in light of recent trends in environmental, social, and governance (“ESG”) investing. As the DOL increases its investigations and inquiries into ESG investments held by retirement plans, Plan Fiduciaries should review their plan investments and policies to:

  • Determine if their retirement plans hold any ESG-type investments, and
  • If they do hold such investments:
  • review their investment policy statements (“IPS”) and evaluate whether such policies comply with the current rules for ESG investments (and will comply going forward with the DOL’s guidance), and
  • confirm whether such investments remain appropriate for the plan

“Private employer-sponsored retirement plans are not vehicles for furthering social goals or policy objectives that are not in the financial interest of the plan,” said Secretary of Labor Eugene Scalia. “Rather, ERISA plans should be managed with unwavering focus on a single, very important social goal: providing for the retirement security of American workers.”

You should reach out to Plan Fiduciaries (generally the employer) to review if ESG-type investments are currently held by their plan. If a plan holds ESG investments and the IPS does not address such investments, immediate action is needed to update such policies and to determine whether such investments remain appropriate for the plan.