GHG Emissions  -  November 29, 2022

Department of Labor Rules That Climate Can Be Considered in Retirement Investments

The US Department of Labor released a ruling which will allow plan fiduciaries to consider climate change and other ESG factors when selecting retirement investments and exercising shareholder rights.

The ruling was issued in response to two previous rules issued in 2020 that limited plan fiduciaries' ability to consider these factors when choosing investments, which the DoL deemed “unnecessary.”

The rule, titled “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” will give retirement plan fiduciaries the protected right to take climate factors into consideration in order to improve the financial security of retirees. It follows an executive order signed by President Biden on May 20, 2021 directing the federal government to identify and assess policies to protect the life savings and pensions of America’s workers and families from the threats of climate-related financial risk.

“The rule announced today will make workers’ retirement savings and pensions more resilient by removing needless barriers, and ending the chilling effect created by the prior administration on considering environmental, social and governance factors in investments,” Lisa M. Gomez, Assistant Secretary for Employee Benefits Security, said in a statement. “Climate change and other environmental, social and governance factors can be useful for plan investors as they make decisions about how to best grow and protect the retirement savings of America’s workers.”