hand drawing diagrams on chalkboard (Photo: Shutterstock)

The DOL has published its final rule related to the consideration and use of ESG factors within retirement plans, highlighting that they may have a material effect on financial risks and returns. Also included is a new provision clarifying the permissibility for participant preferences to be considered when constructing a menu of prudent investment options (Schroders’ retirement survey indicates that 87% of participants do indeed want investments aligned with their values).

The rule makes clear that ERISA’s core principles, which require plan fiduciaries to focus on material economic factors and not sacrifice investment returns or take on additional investment risk to secure a collateral benefit to plan participants, continue to govern. But it also clarifies that use of sustainable investment and ESG integrated products is not inherently incompatible with these core principles.


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