In one of the latest developments in the Biden administration’s recent initiatives to strengthen environmental, social, and governance (ESG) efforts in the United States, the U. S. Department of Labor (DOL) announced last week that it would not enforce a final rule requiring fiduciaries subject to ERISA to evaluate investment opportunities based upon financial performance factors, rather than ESG metrics. The DOL stated that the final rule “created a perception that fiduciaries are at risk if they include any environmental, social and governance factors in the financial evaluation of plan investments.”
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Over the past several years, Environmental, Social and Governance (ESG) initiatives have gained popularity among investors, but have gained less traction in federal law. ESG are a set of criteria that investors use to evaluate the environmental and societal impacts of a business. Some European countries require that companies report their ESG metrics, but ESG reporting in the United States has generally been voluntary. There are some indications that a Biden administration — especially coupled with a democratic congress — may seek to amplify ESG reporting in the U.S. As an early indication of such action, the new administration is expected to view ESG differently than the Trump administration.
Continue Reading ESG in the First 100 Days?