EXAMINING A RANGE OF EMPLOYEE BENEFITS
AND EXECUTIVE COMPENSATION ISSUES
The US Department of Labor (DOL) released the Final ESG Rule on November 22, 2022, regulating the consideration of environmental, social, and governance (ESG) factors by fiduciaries of employee benefit plans subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA). The Final ESG Rule, “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” also addresses proxy voting.

Anti-ESG state legislation continues to focus on public retirement plan investing and asset management. Over the last year, 18 states have proposed or adopted state legislation or regulation limiting the ability of the state government, including public retirement plans, to do business with entities that are identified as “boycotting” certain industries based on environmental, social, and governance (ESG) criteria. Since our last update, four states have either adopted or proposed legislation or other forms of regulation that would restrict ESG activities using state assets.

A group of state treasurers and state attorneys general (AG) have raised concerns that certain environmental, social, and governance (ESG) features of certain fund disclosures and other marketing collateral could create liability under state Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) and Anti-Boycott, Divestment, and Sanctions (Anti-BDS) laws. This is an issue that could impact government retirement plans and/or asset managers to public and private retirement plans.
This post serves as an update to our prior blog post analyzing the impact of this anti-ESG state legislation on public retirement plan investing.
At the same time that the federal government, through the US Department of Labor, appears to be easing retirement plan fiduciaries’ paths to considering certain environmental, social, or governance (ESG) factors in making investment decisions, some states are passing legislation that would prohibit the states from doing business with managers who invest based on ESG criteria.
As the US Department of Labor (DOL) continues to contemplate the role of environmental, social, and governance (ESG) considerations in ERISA plan investing, ESG issues surrounding retirement plans are cropping up in another way: as a target for proxy vote proposals that seek to require companies to evaluate their ESG commitments in retirement plans.
The US Securities and Exchange Commission (SEC) recently approved a proposed environmental, social, and governance (ESG) rulemaking for investment advisers and funds. This proposed rule and form amendments will impact SEC-regulated asset managers, but may also be of interest to investors, including ERISA plans, that consider ESG factors and/or invest in ESG funds.
Cryptocurrency investing has experienced a tidal wave of popularity since the fabled genesis of Bitcoin in 2009. This growth has been fueled by “extreme” investment returns (despite “extreme” volatility) and innovative means of investing in cryptocurrency. As the wave of interest in cryptocurrency investing reaches the shores of 401(k) plans, including interest in cryptocurrency as a plan investment option or through plan brokerage windows, the US Department of Labor (DOL) warns 401(k) plan fiduciaries to exercise “extreme care” before providing plan participants with the opportunity to expose their retirement savings to cryptocurrency.
The US Department of Labor (DOL) recently announced that it is seeking comment on the impact of climate change on retirement security and what actions, if any, the agency should take to protect retirement savings from such risks.