Insights & News

Department of Labor Warms to ESG; Fires up on Proxy Voting

December 06, 2022
Client Alert

On Nov. 22, 2022, the US Department of Labor (DOL) released its Final ESG and Proxy Voting Rules, “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights.” The Final ESG and Proxy Voting Rules address the consideration by employee benefit plan fiduciaries (fiduciaries) of environmental, social and governance (ESG) factors in investing plan assets and exercising their rights as shareholders.

In its release of the Final ESG and Proxy Voting Rules, the DOL noted its long history of vacillating on the extent to which fiduciaries could consider ESG factors but highlighted that it has always been clear that fiduciaries must make investment decisions in accordance with fiduciary duties of loyalty and prudence under ERISA.

The final rules come over a year and a half after the DOL issued a non-enforcement policy of the 2020 ESG and proxy voting regulations (2020 Regulation) and over a year after the DOL proposed regulations.

The majority of the final rules will become effective 60 days after publication in the Federal Register. As noted below, certain provisions of the proxy voting-specific rules become effective one year after publication in the Federal Register. The DOL clarified that until then, the 2021 non-enforcement policy remains in effect. READ MORE...

Information contained in this publication should not be construed as legal advice or opinion or as a substitute for the advice of counsel. The articles by these authors may have first appeared in other publications. The content provided is for educational and informational purposes for the use of clients and others who may be interested in the subject matter. We recommend that readers seek specific advice from counsel about particular matters of interest.

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