The Department of Labor (DOL) announced a final rule for fiduciaries of private-sector retirement plans regarding environmental, social, and governance (ESG) investing.
The final rule amends the department’s longstanding investment duties regulation, first issued in 1979, to codify a clear regulatory structure for considering investments for ERISA plans.
The new rules require that plan fiduciaries select investments based on “pecuniary factors,” or those that the fiduciary determines is expected to have a material effect on risk and/or return of an investment, not its social and environmental impact.
The rule will be effective 60 days after publication in the Federal Register. However, plans will have until April 30, 2022, to make any changes to certain qualified default investment alternatives, where necessary to comply with the final rule.
With a change in the White House, don’t be surprised if this new rule dies quickly.