The DOL proposes rules that would curb proxy voting by plan fiduciaries on shareholder proposals.
By Paul A. Davies, Paul M. Dudek, Ryan J. Maierson, and Kristina S. Wyatt
Continued DOL Antipathy Toward ESG
On August 31, 2020, the US Department of Labor (DOL) issued proposed rules that could induce Employee Retirement Income Security Act (ERISA) plan fiduciaries to either abstain from voting on shareholder proposals related to environmental, social, and governance (ESG) matters or establish policies that would have plans default to voting in favor of management’s recommendations. This latest development comes on the heels of DOL actions designed to limit fiduciaries’ consideration of ESG factors in their investment decisions, as discussed in this blog post.
In response to trustees’ uncertainty about how environmental, social, and governance (ESG) factors — as non-financial factors — apply to pension schemes, the Law Commission and the Department for Work and Pensions (DWP) have been exploring fiduciary duties and regulatory changes to better accommodate ESG factors in pension schemes since 2014.