ML BeneBits

The US Department of Labor (DOL) released an extensive regulatory agenda in January 2023 laying out the agency’s priorities for the year. The DOL has faced scrutiny from Congress this legislative session, demonstrated most recently by the congressional repeal of the DOL’s so-called “ESG Rule” in early March. President Joseph Biden’s veto of that repeal on March 20, 2023, rescued the ESG Rule from the congressional chopping block. Luckily for the DOL, however, many of the other 70-plus priority items for 2023 appear to be less controversial. Below we summarize a few of those items that have direct relevance to Employee Retirement Income Security Act (ERISA) regulated retirement plan sponsors.
Both the US House of Representatives and the Senate passed a resolution to overturn the US Department of Labor’s so-called “ESG Rule” on February 28 and March 1, 2023, respectively. The ESG Rule has been a topic of debate as it sought to clarify the role that environmental, social, and governance (ESG) factors can play in fiduciary decision-making on behalf of retirement plans regulated by ERISA. This resolution is part of a larger effort to limit ESG investing at both federal and state levels.
The Employee Benefits Security Administration (EBSA) of the US Department of Labor (DOL) has continued to be active in civil and criminal enforcement investigations of ERISA’s fiduciary duties. This blog post details two recent updates concerning the DOL’s ERISA enforcement program.

Best of BeneBits 2022

December 29, 2022
As 2022 comes to a close, we're resharing our top five most-read blog posts of the year. Thank you for your engagement, and we look forward to providing you with more content in 2023!
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.