The Labor Department’s rule to expand environmental, social and governance options for retirement plans is being called a healthy compromise between financial services firms that want clear rules and plan sponsors that feared strict mandates to consider such factors.
The final rule, released last week, empowers plan fiduciaries to consider climate change and other ESG factors when making investment decisions, expanding options for Americans who want their retirement savings to incorporate ESG criteria.
The rule reverses the Trump administration’s changes to the implementation of a 1974 law known as the Employee Retirement Income Security Act, a law that governs a broad range of retirement and health benefit plans. The Biden administration, investors and other ESG proponents had said the Trump administration changes created a “chilling effect” on sustainable investments’ inclusion in retirement plans.
