STATEMENT OF THE INSURED RETIREMENT INSTITUTE ON THE U.S. DEPARTMENT OF LABOR’S FINAL ESG RULE

WASHINGTON, D.C. – Today, the U.S. Department of Labor (DOL) issued a final rule governing the use of environment, social, and governance (ESG) investments in retirement accounts. In December 2021, the Insured Retirement Institute (IRI) provided the DOL with comments on their proposed rule. IRI urged the DOL to ensure that any final rule be neutral regarding investment type while providing long-term clarity and certainty for plan fiduciaries.

IRI is studying the final regulation and will consult with its members for a detailed analysis. Still, an initial review shows that the final rule meets the neutrality, long-term clarity, and certainty goals. The final rule addresses several of IRI’s comments, including the recommendation that retirement plan sponsors be permitted – but not required – to consider ESG factors when selecting plan investment options.

“Our initial read of the U.S. Department of Labor ESG regulation is that it is generally consistent with IRI’s position that ESG factors and investments should be treated no differently than non-ESG factors and investments,” said Jason Berkowitz, IRI Chief Legal and Regulatory Affairs Officer. “We believed that neutrality between ESG and non-ESG investment factors was attainable under a rule built around ERISA’s fundamental principles of prudence and loyalty, under which plan fiduciaries are required to act in the best interest of plan participants, and it appears that the Department has achieved this objective.”

He added, “This final rule is the result of an effective rulemaking process, as the Department sought out, heard, and reacted to constructive feedback from IRI and other stakeholders. We look forward to seeing this collaborative approach put to use in future DOL rulemaking efforts.”

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Contact: Dan Zielinski