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In an article published by The Wall Street Journal, Liskow attorney Robbie Mashburn examines the tension between two Labor Department rulemakings governing 401(k) plan investment offerings.
The Labor Department is expected to propose repealing rules that allowed plan administrators to weigh environmental, social, and corporate governance factors, likely requiring sponsors to focus solely on financial, or “pecuniary,” considerations. At the same time, a separate Labor Department proposal aims to expand 401(k) plans’ access to private-market investments, an objective that could be complicated by a strict ESG-exclusion rule, given that many private strategies pursue both financial returns and social or environmental goals.
Robbie, who focuses on employee benefits and compensation, explains how ERISA’s duty of loyalty frames the analysis, noting that plan sponsors must be careful not to do anything that may not be beneficial to their plan participants on a financial basis. He also offers a measured prediction on where the rulemaking may land: rather than prohibiting ESG-type assets outright, the DOL may be more likely to require that sponsors demonstrate they are looking after the financial interests of the participants.
To read the full article, click here.
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