Labor Department finalizes U.S. rule curbing sustainable investing by pension funds
Source: Reuters
ESG ENVIRONMENT
OCTOBER 30, 2020 6:48 PM UPDATED 2 HOURS AGO
Labor Department finalizes U.S. rule curbing sustainable investing by pension funds
By Jessica DiNapoli, Ross Kerber
3 MIN READ
NEW YORK/BOSTON (Reuters) - The U.S. Department of Labor on Friday finalized a rule clarifying that pension fund managers must put retirees’ financial interests first when allocating investments, rather than other concerns such as climate change or racial justice.
The move by the department under the administration of U.S. President Donald Trump came ahead of Tuesday’s election and represents the latest in a series of efforts to make it harder to use investment assets to address social issues.
Labor officials said that they made “significant changes” to the rule governing roughly $10 trillion in pension plan assets in response to over 1,000 comments they received, many critical.
The main change is that the final rule does not include references to so-called “ESG investing” or picking stocks for environmental, social or governance reasons, officials said. The rule focuses on pecuniary factors, which the department says have a “material” effect on the risk and return of an investment.
Net deposits into ESG funds have soared on growing interest from clients and strong performance, trends cited by critics of the new rule including large asset managers.
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Read more: https://www.reuters.com/article/us-esg-rule/labor-department-finalizes-u-s-rule-curbing-sustainable-investing-by-pension-funds-idUSKBN27F35M
