Trade groups and investment managers react to DOL actions on ESG investing

The American Bankers Association (ABA) has come out in support of the Department of Labor’s (DOL) revisions to its investment duties regulation that includes consideration of ESG investment factors and fiduciary proxy voting.

In October, the DOL announced it was reversing rules implemented under President Trump that would have inhibited a plan fiduciaries’ ability to consider climate change and other ESG factors when selecting investments and exercising shareholder rights.

The ABA has praised the new proposals ‘principles-based approach’ as well as the removal of “unnecessary barriers for fiduciaries to consider as part of a prudent process for ESG considerations,” including the pecuniary factors requirement.

The ABA has also urged the DOL to allow the “consideration of ESG factors as part of the prudent investment decision-making process”.

The trade body also called for changes to the rule’s proxy voting provisions and is pushing for the DOL to have the proposal take effect immediately while providing a 12-month compliance period to ensure affected firms are able to readjust.

Voya Financial is also supportive of the proposals, praising its recognition of “the important role that climate change and other ESG factors can play in the evaluation and management of retirement plan investments while continuing to uphold fundamental fiduciary obligations”.

CEO at Voya Investment Management, Christine Hurtsellers, said: “We applaud the DOL’s considerations and ultimate changes suggested in the proposed rulemaking as they are a step in the right direction on ESG investment activities.”

In September, the US Forum for Sustainable and Responsible Investment (US SIF) released updated guidance for pension funds ahead of changes to DOL rules on the matter.

The guide focuses on boosting knowledge of sustainable investing for plan sponsors and gauging interest from plan participants.