Arnerich Massena recently submitted comments on the Department of Labor’s (DOL) new proposed rule intended to update and clarify fiduciary requirements for ESG investing in ERISA retirement plans. The new proposed rule, as drafted, would greatly stifle plan sponsors’ ability to consider ESG and impact criteria when selecting plan investment options. We are very pleased to see that our comments were far from alone in opposing the rule as drafted.

Morningstar reports that “public comments were overwhelmingly opposed to the proposed rule,” noting that an incredible 95% of comments were opposed. Reasons for the opposition mirrored our own, noting that the new guidance is at odds with a growing body of research demonstrating the financial materiality of ESG factors. The new guidance suggests that ESG investment could “subordinate return or increase risk for the purpose of non-pecuniary objectives,” and commenters largely rejected this assumption.

Despite a very short 30-day public comment period, the DOL received almost 9,000 comments. Most were from individuals, but they received plenty of industry feedback as well, including trade and policy organizations, providers, and investment managers. Arnerich Massena was one of 46 financial advisors who submitted comments from around the United States, 43 others of whom opposed the rule alongside us.

You can read our full comment letter below, which we believe provides important perspective on this policy. We are hopeful that the DOL will hear the overwhelming feedback that is based in well-researched knowledge and understanding of the current investment environment and thinking around ESG and impact factors being potentially highly beneficial to consider and of interest to plan participants in including in retirement plan investment options.

“I think it’s fantastic that Arnerich Massena has a voice in this fight as we hope to pave the way to a better future and more impact options for all investors,” notes Arnerich Massena co-CEO and co-chief investment officer Bryan Shipley, CFA, CAIA.

You can read more from Morningstar about the public comments at https://www.morningstar.com/articles/998787/strong-opposition-to-proposed-limits-on-esg-in-retirement-plans

Read the DOL press release on the proposed rule at https://www.dol.gov/newsroom/releases/ebsa/ebsa20200623

Read the full proposed rule at

https://beta.regulations.gov/document/EBSA-2020-0004-0002