Senior Partner Jerry Schlichter Quoted by The New York Times in Retirement Article
As reported by The New York Times, the U.S. Department of Labor (“DOL”) is proposing a new federal regulation that could discourage retirement funds from making investments based on environmental, social and governance considerations (“ESGs”). In a June 23 news release, the DOL announced plans to “provide clear regulatory guideposts for plan fiduciaries in light of recent trends” in ESG investing – namely, its significant rise in popularity in recent years.
The DOL’s proposed rule states that ESG concerns can be taken into account “independent of factors like risk and return only if they act as a kind of tiebreaker when investments are otherwise financially indistinguishable.” Further, the proposed rule would require that plan administrators document the investment analysis guiding such a decision.
The article quotes Schlichter Bogard & Denton Senior Partner Jerry Schlichter, who said he was not aware of fiduciaries for defined contribution plans engaging in widespread ESG investing. “That has not been something that we’ve seen,” Mr. Schlichter said. “It hasn’t been done by fiduciaries in any broad way, in part due to concerns about exposure for litigation.”