DOL Plans to Replace ESG Rule for Retirement Plan Fiduciaries
The U.S. Department of Labor (DOL) indicated in court documents that it intends to begin new rulemaking to replace a previous rule that permitted 401(k) plan fiduciaries to consider environmental, social, and governance (ESG) factors when choosing investment options in the plan. Quick Hits The DOL will no longer apply a previous rule that allowed retirement plan fiduciaries to take ESG factors into account when selecting investment options . Twenty-six states challenged the rule in the Fifth Circuit Court of Appeals. Plan fiduciaries may continue to rely on financial factors to make decisions about which investments to include in the plan. Under the Employee Retirement Income Security Act (ERISA), retirement plan fiduciaries are required to select and monitor plan investments in accordance with ERISA’s fiduciary duties. Among those duties are the requirements to prudently select and monitor plan investments, to diversify plan investments in most cases, and to act solely in the i...