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Update on DOL ESG Proposed Rules

The DOL continues to focus on how climate change, social and governance factors (ESG), may impact ERISA-covered retirement plans and has not yet finalized its rule.

In October 13, 2021, the DOL proposed a rule that updated its 2020 RULE concerning fiduciary responsibilities when considering environmental, social or governance (ESG) factors in making investment selections for a retirement plan or exercising shareholder rights. The proposed rule, "Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights" followed the DOL’s announcement that it would not enforce the rule published and finalized during President Trump’s administration in late 2020.

The proposed 2021 rule would enable ERISA plan fiduciaries to incorporate more environmental, social, and governance (ESG) investing and makes it feasible for ERISA fiduciaries to consider ESG factors without violating ERISA's fiduciary duties. The DOL’s comment period ended December 31, 2021.

While the DOL is still reviewing these comment letters, on Feb. 11, 2022, the DOL issued a "Request for Information on Possible Agency Actions to Protect Life Savings and Pensions from Threats of Climate-Related Financial Risk.” The RFI focuses on further steps the DOL could take to limit the effects of climate-related financial risk on retirement savings. The RFI responses are due May 16, 2022.

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