Posted on March 10, 2021

WASHINGTON, D.C. - The Insured Retirement Institute (IRI) said today that it supports a U.S. Department of Labor (DOL) decision not to enforce two recently published regulations. The affected rules, "Financial Factors in Selecting Plan Investments" and "Fiduciary Duties Regarding Proxy Voting and Shareholder Rights," were published near the end of the Trump Administration.

"We strongly support today's decision by the DOL to temporarily forgo enforcement of the ESG and proxy voting rules," said Jason Berkowitz, IRI Chief Legal and Regulatory Affairs Officer. "This will provide an opportunity for the Department to re-evaluate and possibly revise or withdraw them."

The rule regarding plan investments modified the long-standing regulatory guideposts plan fiduciaries must follow when selecting investment options to make available to participants in their retirement plans. The rule would significantly impair plan sponsors' ability to consider environmental, social, and governance (ESG) factors. During the rulemaking process, IRI provided comments to the Department that the rule was unnecessary.

"The final rule reflected the Trump administration's posture regarding ESG investments without adequately considering the broader implications of the rule," Berkowitz said. "We believe the final rule would make the investment selection process for plan sponsors much more complicated and burdensome than is necessary to effectively protect plan participants," he added.

In its June comments on the then-proposed ESG rule, IRI identified potential impacts on investment selection and successful plan financial performance, heightened risks of regulatory burdens, and inconsistencies with the Department's well-established principles-based rules.

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Contact: Dan Zielinski