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Environmental, Social and Governance (ESG) Investing

Given the recent interest in ESG investing, the Department of Labor (DOL) has provided “clear regulatory guideposts” regarding the investment duties and requirements set forth in accordance with ERISA. In summary, ERISA plans should be solely focused on providing the “retirement security of American workers.” Plan fiduciaries must select investment and “investment courses of action” based on financial considerations relevant to the “risk-adjusted economic value of a particular investment or investment course of action.” ESG investment vehicles are not to be selected when the “underlying investment strategy of the vehicle is to subordinate return or increase risk for the purpose of non-financial objectives.”

www.planadviser.com; June 24, 2020.