Letter on Department of Labor ESG Rules

On July 30, MFA and AIMA submitted a comment letter in response to the Department of Labor’s proposed rule on ERISA fiduciary consideration of ESG factors when making ERISA plan investments. In the letter, we noted our support of the Department’s goal to emphasize that ERISA fiduciaries must select investments based solely on financial considerations, but also expressed our concern that the proposal articulates a skeptical view of investments that integrate ESG considerations that could, over time, deprive plan participants and beneficiaries of prudent investment opportunities that offer the potential for increased risk-adjusted returns. We discussed how investment managers considering ESG factors is a material part of a prudent investment return and risk assessment consistent with generally accepted investment theories and consistent with an ERISA fiduciary’s obligations in selecting investments. To avoid unduly limiting ERISA plan access to valuable investment opportunities, we urged the DOL to provide additional clarity or guidelines regarding how ERISA fiduciaries can satisfy their duties when selecting investments that integrate ESG considerations.