Department of Labor Issues Guidance on ESG Considerations

On April 23, 2018, the DOL published Field Assistance Bulletin No. 2018-01, which provides guidance on the considerations of ESG factors by ERISA plan fiduciaries. While investor focus on ESG factors continues to grow, the FAB cautions ERISA fiduciaries from readily treating ESG factors as economically relevant. It also notes that plan fiduciaries may not sacrifice investment return or take on additional investment risk to promote collateral social policy goals. Instead, the DOL calls on ERISA fiduciaries to prioritize the economic interests of the plan and focus on economic factors that have a material effect on risk and return, unless the ultimately chosen investment would be equal or superior to alternative investments based solely on economic value. The S&C memorandum discussing the guidance is available here.