As October wound to a close, the Labor Department unveiled its Final Rule on Financial Factors in Selecting Plan Investments—and while the proposed rule spent a lot of time on ESG, the final rule—well, it “contains no specific references to ESG or ESG-themed funds.” This week, we’d like to know what you think of the rule.
Now, with a change in administrations, it’s future may be limited, but the final rule provided a somewhat different take on ESG investments. Indeed, the final rule on ESG investing by ERISA plans steps away from the proposed rule’s focus on ESG.
Rather, acknowledging the fluid definition of environmental, social, and governance factors, the Labor Department’s position is that “the lack of a precise or generally accepted definition of ‘ESG,’ either collectively or separately as ‘E, S, and G,’ made ESG terminology not appropriate as a regulatory standard.” Therefore, the final rule—which will be effective 60 days after publication in the Federal Register—refers to “pecuniary factors and non-pecuniary factors” in defining the relevant fiduciary investment duties.
But as things stand today, we now have a final rule on those “financial factors,” most specifically the emphasis on pecuniary factors in making investment selections. So, tell us what you think—do you like the final rule? Do you think it will matter? Respond to this week’s NAPA-Net Reader poll at https://www.research.net/r/BNVVVXG.
And of course, we’ll have all those “factors” (pecuniary and otherwise) sorted out for you by Friday.
