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December 14, 2021

Better Markets Letter Supports Consideration of ESG Factors in Selection of Retirement Plan Investments

FOR IMMEDIATE RELEASE
Tuesday, December 14, 2021
Contact: Doug Walker at 202-618-6430 or dwalker@bettermarkets.org

WASHINGTON, D.C.—Better Markets Legal Director and Securities Specialist Stephen Hall released the following statement on the filing of Better Markets’ response to the Department of Labor’s proposed rule that would amend several provisions of the agency’s Investment Duties regulation:

“Better Markets fully supports the Labor Department’s proposal to remove current barriers limiting retirement plan fiduciaries’ ability to consider climate change and other environmental, social, and governance factors when they select investments and exercise shareholder rights.

“The Department’s Proposed Rule is an important step forward in serving the best financial interests of retirement savers. Substantial evidence shows that the ESG factors are material to the financial performance of investments and that the use of the ESG factors in selecting investments for retirement savers is highly appropriate since they can improve investment value and long-term investment returns. The proposal also offers the added benefit of helping solve several major social policy challenges, including climate change, economic inequality, and corporate governance failures that harm workers, communities, and other stakeholders. The rules it will replace were issued in 2020 and took a head-in-the-sand approach to climate change and other ESG challenges, in effect precluding their consideration by fiduciaries.

We urge the Labor Department to finalize the Proposal, without diluting its provisions, to provide needed clarity for the benefit of fiduciaries; to serve the best financial interests of plan participants and beneficiaries; and to better promote broader economic and societal goals relating to climate change, worker productivity, and corporate manager accountability.

“Additionally, we urge the Department to consider further steps to strengthen the role of ESG factors in the selection of retirement plan options. For example, the Department should consider requiring that participant-directed plans offer at least one investment option that accounts for and integrates ESG factors as part of a collection of prudently chosen plans.”

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.

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