The DOL Issues Its Final Word On ESG And Proxy Voting (For Now)

Key takeaways:

• On November 22, 2022, the U.S. Department of Labor (the "DOL") made available final regulations revising and rescinding portions of the Trump-era rules addressing a fiduciary's duties under Section 404 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that placed a chilling effect on the ability to consider environmental, social and governance (ESG) factors in the management and investment of ERISA plan assets.
• The final regulations create a framework within which an ERISA fiduciary may take ESG into account in a manner that complies with ERISA. They largely track the DOL's proposed regulations issued in October 2021 (our Debevoise Debrief on the proposal can be found here) with two notable additions:
  • The regulations adopt new principles that permit ERISA fiduciaries to embrace ESG-driven investing by empowering ERISA fiduciaries to decide for themselves which risk and return factors have economic effect and what