For Immediate Release:
Oct. 13, 2021
CONTACT:
Carter Dougherty
carter@ourfinancialsecurity.org
(202) 251-6700
Labor Department: Retirement Plans and Pensions Right To Consider Sustainability, Jobs, Equity, Workers
WASHINGTON, D.C. — Americans for Financial Reform Education Fund (AFREF) applauds the Labor Department for issuing this proposal to better allow and encourage retirement plans and pensions to consider sustainability factors like workers’ rights, racial justice, corporate governance, and climate change when investing. We look forward to submitting detailed comments on the proposal.
“This proposal would provide material benefits to workers and retirees by opening the door to more sustainable management of their retirement savings,” said Alex Martin, senior policy analyst at Americans for Financial Reform. “Investors and money managers increasingly consider sustainability factors when investing and voting on proposals; it’s simply part of modern retirement investing and provides real economic benefits. In this proposal, the Department rightly recognizes that because these factors are very often material, consideration by retirement plans is not just permissible but in many cases necessary to satisfy their fiduciary duties.”
The proposed rule would also allow retirement plans to choose freely between investments that “equally serve the best interests of the plan,” and to consider factors like sustainability, advancing racial equity, or collateral economic benefits to break the tie. Additionally, retirement plans like 401ks will now be able to select investment funds with a sustainability focus as the default option for participants.
This revision process was initiated by a May executive order from President Joe Biden that directed the Labor Department to revise or rescind two damaging Trump-era rules that sought to curb sustainable investing, mainly to prop up the fossil fuel sector. This proposal represents a strong reversal that would level the playing field and facilitate sustainable investing strategies that benefit U.S. workers and retirees.
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