Department of Labor to Revisit ESG, Proxy Voting Final Rules

In response to concerns raised by industry stakeholders including the American Bankers Association, the Department of Labor will revisit its recent final rules regarding environmental, social or governance investing and a fiduciary’s proxy voting activity under the Employee Retirement Income Security Act. In a statement, DOL noted that it has received significant feedback suggesting that the rulemakings were rushed, as well as concerns that the final rules “have already had a chilling effect on appropriate integration of ESG factors in investment decisions.”

The ESG investing final rule requires ERISA fiduciaries to evaluate investments and investment courses of action based solely on pecuniary factors. Under the proxy voting final rule, fiduciaries must carry out their duties related to proxy voting solely in accordance with the economic interest of retirement investors. Both rules are part of DOL’s investment duties regulation.

DOL noted that it will not enforce compliance with the final rules until further guidance can be published.