Key Takeaways
- The Trump administration is dropping its defense of the Biden-era ESG regulation on prudence for investment selection for fiduciaries of ERISA-governed retirement plans.
- In turn, the Biden era regulation reversed a regulation from the first Trump administration that was, in parts, anti-ESG.
- The Trump administration is expected to reinstate a regulation similar to the one from its first administration.
- Fiduciaries of ERISA-governed retirement plans manage the risk of the conflicting political views by focusing (i) on selecting and retaining investments with superior risk and return profiles and (ii) on the criteria used by the investment managers of their funds.
This article is, in large part, an unfortunate story about the perils of politicians and their use of the regulatory system to accomplish political objectives.
For decades, Republican and Democratic administrations engaged in a tug-of-war on the use of certain factors for the selection and monitoring of plan investments. Think of ETI—economically targeted investments; SRI—socially responsible investments; and ESG—environmental, social and governance factors.
Continue reading Things I Worry About (14): ESG and the Political Back-and-Forth at the DOL
