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Has There Been a Climate Change for ESG Investing in DC Plans?

ESG Investing

Roughly a year ago, the Labor Department issued a proposed new rule on “Financial Factors in Selecting Plan Investments”—but that, as they say, was then. We asked readers then what they thought—but have your opinion(s) changed?

It’s hard to believe that it’s (only) been a year since that proposal—one arguably intended to put a “pause” on the consideration of ESG factors by ERISA fiduciaries—and one that, in the intervening months, seems to have had the opposite response, highlighting those considerations and engendering what seems to be a whole new level of debate, if not appreciation for the implications.

That said, workable, consistent definitions of ESG remain fluid, and perhaps as a result, the adoption rate among defined contribution plans has been tepid—and the take-up rate among participants even lower. Fewer than 3% of plans offer an ESG option, according to the 63rd annual Plan Sponsor Council of America survey, and less than 0.2% of plan assets have been invested in those options. On the other hand, at least one recent participant survey suggests that workers would not only invest in ESG options—if they knew about them—but that they might contribute more.  

But—as noted above—a lot has changed since the Labor Department’s proposed rule: a final rule that seemed to walk back (some) the harsh rhetoric in the preamble to the proposed rule, a new administration that first froze enforcement, and then just last month issued an Executive Order that directed the Secretary of Labor to reconsider rules that that would have barred consideration of ESG factors. All this at a time when retail trends suggest growing interest in the option.

This week, we’re curious as to what, if any, impact all of this may have had on your experience with ESG offerings, whether your plan sponsor client and prospects have an appetite for this option (or more of this option), and what you think the future holds… now.

Reply to this week’s NAPA Net Reader Poll at

And we’ll have it all sorted out for you on Friday!