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DOL proposes ESG rule

The Department of Labor (DOL) finally proposed a rule that would allow plan fiduciaries to consider climate change and other environmental, social and governance factors when selecting investments and exercising shareholder rights.

The proposal, states “that climate change and other ESG factors are often material and that in many instances fiduciaries … should consider climate change and other ESG factors in the assessment of investment risks and returns.”

The new proposal includes specific language about ESG factors—as well as other “collateral benefits” such as social good—serving as a tiebreaker when a fiduciary is selecting between economically indistinguishable investment options. In short, the proposal approves this practice.

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