CFA wrote to the Department of Labor’s Employee Benefits Security Administration in response to their request for comment regarding proposed changes to rules covering the duties of prudence and loyalty that apply to plan fiduciaries that are regulated by the Employee Retirement Income Security Act of 1974 (ERISA), titled Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights. CFA strongly encouraged the Department to advance these amendments.

The amendments as proposed will provide important and necessary relief to ERISA plan fiduciaries that consider climate change and other environmental, social, or governance (“ESG”) considerations when making plan decisions, including decisions regarding investment choices and voting proxies. This rule proposal is warranted because it reflects the reality that ESG considerations are often material for corporate issuers and to the decision-making process of investors, and therefore ERISA-regulated plan fiduciaries must be permitted to take them into account in the same way that they are permitted, and indeed required, to consider other relevant factors.