The Department of Labor (DOL) has proposed a rule, Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights, which would clarify that ESG factors should, in many instances, be considered in the investment process. This rule would amend the current regulations, implemented during the previous administration, removing ambiguity that has limited fiduciaries’ focus on such factors when considering investments or exercising proxy rights. In contrast to the current rules, this proposal specifically allows ESG factors, such as climate change, to be considered when analyzing a fund’s projected return. Additionally, the proposal would eliminate the special standards for Qualified Default Investment Alternatives (QDIAs) so that those investments would be subject to the same scrutiny as all other types of funds. Safe harbors for fund managers electing to not participate in shareholder voting would be eliminated as well as documentation requirements for proxy voters when casting “ESG-related votes.” The public has 60 days to provide comments.
www.news.bloomberglaw.com; October 13, 2021.