On Dec. 16, the department published a final rule on “Fiduciary Duties Regarding Proxy Voting and Shareholder Rights” that also adopted amendments to the Investment Duties regulation to address obligations of plan fiduciaries under ERISA when voting proxies and exercising other shareholder rights in connection with plan investments in shares of stock.
The department said it heard from a wide variety of stakeholders, including asset managers, labor organizations and other plan sponsors, consumer groups, service providers and investment advisors who have asked whether these two final rules properly reflect the scope of fiduciaries’ duties under ERISA to act prudently and solely in the interest of plan participants and beneficiaries.
Industry commentors have also questioned whether the department rushed the rulemakings and failed to adequately consider and address the substantial evidence submitted by public commenters on the use of environmental, social, and governance considerations in improving investment value and long-term investment returns for retirement investors.
The department also said it has heard from stakeholders that the rules, and investor confusion about them, have already had a chilling effect on the appropriate integration of ESG factors in investment decisions, including in circumstances that the rules may in fact allow.