ABA Recommends Changes to DOL’s  Proposed Revisions to ESG Investing Rule

The American Bankers Association today wrote to the Department of Labor in support of the agency’s revisions to its investment duties regulation that include consideration of environmental, social, and governance investment factors and a fiduciary’s proxy voting activity under the Employee Retirement Income Security Act.  ABA expressed appreciation for the more principles-based approach of the proposal, and the removal of “unnecessary barriers for fiduciaries to consider as part of a prudent process for ESG considerations,” including the “pecuniary factors” requirement in the current rule and the limitations on qualified default investment alternatives.

The association also offered several specific recommendations to improve the proposal. With regard to the ESG provisions, ABA urged DOL to allow—but not require—the consideration of ESG factors as part of the prudent investment decision-making process; avoid references to specific, enumerated ESG factors in the proposal; and to remove or amend the disclosure requirements in the collateral benefit safe harbor.  ABA also made recommendations regarding the investment analysis process.

In addition, ABA called for changes to the rule’s proxy voting provisions and urged DOL to have the proposal take effect immediately while providing at least a 12-month compliance date to ensure affected firms have ample time to meet the new requirements.