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IAA Statement: DOL’s Final ESG Rule

November 22, 2022

The IAA commends the DOL for its efforts to address uncertainties regarding how fiduciaries may consider ESG issues, including climate-related financial risk, in making investment and proxy voting decisions. The IAA also appreciates that the DOL makes clear that climate change and other ESG factors are often material to these decisions. We raised significant concerns about the current rule’s ESG and proxy provisions when they were proposed and urged the DOL to withdraw both proposals. We are pleased to see that the DOL incorporated many of our comments in the final rule, specifically removing:

  • the concept of “pecuniary factors” from the rule text;
  • certain documentation requirements that in our view are unnecessary;
  • the concept of “economically indistinguishable” that was included in the current rule’s “tie-breaker” standard; and
  • the prohibition in the current rule against adding or retaining a fund, product, or model portfolio as a qualified default investment alternative (QDIA) if it considered climate change factors.

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