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In mid-October, the US Department of Labor (DOL) proposed a revised rule clarifying fiduciary responsibilities when selecting investment options for defined contribution (DC) plans. In our view, the new rule is a big step forward in encouraging fiduciaries to consider environmental, social and governance (ESG) factors when designing plan investment menus.

The rule, formally known as “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” sets out the standards for key plan-sponsor duties. They include selecting plan investment options, along with qualified default investment alternatives (QDIAs), exercising shareholder rights—such as proxy voting—and the use of written proxy-voting policies and guidelines.

 

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