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DOL keeps ESG in focus in 2023

The Department of Labor underscored its commitment to removing barriers to entry for ESG in retirement plans, noting it as an integral piece of SECURE 2.0. As reported by Pensions & Investments:

The department finalized a rule in November that allows retirement plan fiduciaries to consider climate change and other environmental, social and governance factors when selecting investments and exercising shareholder rights...
The purpose of that rule is to just make it clear that fiduciaries can take ESG factors into consideration when they're making retirement decisions, just like they would prudently consider any other factors," said Ms. [Lisa] Gomez, assistant secretary of labor for the Employee Benefits Security Administration said at the National Institute on Retirement Security's 2023 Annual Retirement Policy Conference.

Simply put, ESG is poised to play a more prevalent role in the investment landscape. Despite the politicization of ESG as part of the research process, the SEC is moving forward with clearer corporate climate disclosure rules, and the DOL stands by its incorporation of ESG into the SECURE 2.0 Act.

What Does it Mean for Investors?

Investors will have easier access to ESG in their retirement portfolios, raising the visibility of relevant investments – and likely increasing asset flows.

What Should Financial Advisors Do?

Advisors should be ready for questions from clients who will more frequently come across ESG options in retirement vehicles. Clients may turn to their advisors for information and guidance about which funds best fit their goals.

Hear how Maria Egan, Vice President at Reynders, McVeigh Capital Management, approaches similar subjects with clients in our interview about ESG as Part of the Client Process.

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