US. Biden May Have to Move Quickly to Reverse Anti-ESG Rule
The clock is ticking for the Biden administration to nullify Donald Trump’s restrictions on retirement plan fiduciaries, rules by which the Republican sought to limit their ability to direct money into environmental, social and governance funds.
Trump’s Department of Labor moved earlier this month to adjust the Employee Retirement Income Security Act of 1974 (ERISA) to require those overseeing pension and 401(k) plans to always put economic interests ahead of so-called non-pecuniary goals. It was seen as a direct attack on ESG and green investing (though they have become more profitable of late).
In response, several financial advisory firms have since taken steps to reduce the number of ESG-focused funds they deem appropriate for retirement investors.
“The rule is already having a harmful effect,” said Jon Hale, head of sustainability research at Chicago-based Morningstar Inc. “Retirement fiduciaries and consultants are removing ESG funds from plans and from being considered for plans, at a time when these funds are more numerous than ever before, have outperformed traditional funds in recent years, and have attracted more flows from investors.”
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