The recent field assistance bulletin by the U.S. Department of Labor, which asserts that under ERISA “fiduciaries must not too readily treat ESG factors as economically relevant…” demonstrates a lack of awareness of what constitutes economic relevance. The bulletin does not rescind any portion of the 2015-2016 guidance, which we wrote about at the time, and thus has little practical impact. It appears to be simply an effort to chip away at progressive Obama-era policies.
In line with responses to similar efforts to dismantle or weaken public policy that supports widely accepted environmental, social and governance principles, leading organizations in both the corporate and financial sector will maintain momentum toward consideration of all material factors that contribute to sustainable long-term financial performance, including the environmental and social impacts of their business activities and investment decisions. Indeed, we believe that investment advisors that do not incorporate the discipline of ESG analysis into investment decisions are shirking their fiduciary responsibilities to their clients.