Public support is overwhelming for the U.S. Department of Labor’s proposed rule addressing the consideration of environmental, social, and governance (ESG) criteria and allowing proxy voting in retirement plans, according to a new report by the Ceres Accelerator for Sustainable Capital Markets, US SIF: The Forum for Sustainable and Responsible Investment, and Environmental Defense Fund.
The proposal, Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights, would apply to funds covered by the Employee Retirement Income Security Act (ERISA). The proposal would reverse Trump administration-issued rules that made it more difficult to consider ESG criteria in ERISA plans, especially in default options. The 2020 rules also increased regulatory burdens on fiduciaries when voting proxies.
Today’s report finds:
97% of commenters supported the Labor Department’s reversal of the Trump-era rules and clarification that use of ESG criteria in investment selection and removing burdens on proxy voting is consistent with fiduciary obligations under ERISA.
83% of institutional letters were supportive of the proposed rule, with some of these recommending changes. All the letters from corporations and financial services firms were in favor of the proposed rule.
97% of individual comments were supportive of the proposed rule.
Major firms that expressed support for the rule include:
State Street, BlackRock, BNY Mellon, Franklin Templeton, LGIM America, Mercer, MSCI, Morningstar, Natixis, Northern Trust, TIAA, and Vanguard.
“The strong support for the proposed rule by our members and other financial institutions and corporations demonstrates the broad understanding that environmental, social and governance data   are important considerations when making investment decisions in retirement plans,” said Lisa Woll, CEO of US SIF. “Respondents also supported the plan to remove barriers created in 2020 for utilizing ESG consideration in default plans (Qualified Default Investment Alternatives).”
“The overwhelming support from corporations and financial services firms shows that the business community recognizes the economic impact of the climate crisis, including both the risks and the opportunities that it presents,” said Steven M. Rothstein, Managing Director of the Ceres Accelerator for Sustainable Capital Markets at Ceres. “The large number of comments shows that this issue has struck a chord with individuals, who want more sustainable options in their retirement plans.”
“Climate change is a serious and growing threat to our financial system. The proposal would help safeguard Americans’ financial futures by making clear that the consequences of climate change can be considered alongside other financial risks. The overwhelmingly supportive comments from business and financial leaders underscore our recommendation that the Department of Labor swiftly finalize this proposal,” said Michael Panfil, Lead Counsel and Director of Climate Risk Strategies at EDF.
About the organizations
Ceres is a nonprofit organization working with the most influential capital market leaders to solve the world’s greatest sustainability challenges. The Ceres Accelerator for Sustainable Capital Markets is a center within Ceres that aims to transform the practices and policies that govern capital markets in order to reduce the worst financial impacts of the climate crisis. It spurs action on climate change as a systemic financial risk—driving the large-scale behavior and systems change needed to achieve a net zero emissions economy. For more information, visit ceres.org and ceres.org/accelerator and follow @CeresNews.
US SIF: The Forum for Sustainable and Responsible Investment is the leading voice advancing sustainable and impact investing across all asset classes. Its mission is to rapidly shift investment practices toward sustainability, focusing on long-term investment and the generation of positive social and environmental impacts. US SIF members include investment management and advisory firms, mutual fund companies, asset owners, research firms, financial planners and advisors, community investing organizations and nonprofit associations. Learn more at www.ussif.org.
One of the world’s leading international nonprofit organizations, Environmental Defense Fund (edf.org) creates transformational solutions to the most serious environmental problems. To do so, EDF links science, economics, law, and innovative private-sector partnerships. With more than 2.5 million members and offices in the United States, China, Mexico, Indonesia and the European Union, EDF’s scientists, economists, attorneys and policy experts are working in 28 countries to turn our solutions into action. Connect with us on Twitter @EnvDefenseFund