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By: Danette Edwards, Johnjerica Hodge, Nikita Yogeshwarun from Katten Muchin Rosenman LLP

On November 22, 2022, the U.S. Department of Labor (DOL) announced a final rule promulgated by the Employee Benefits Security Administration that allows retirement plan fiduciaries to consider environmental, social and governance (ESG) factors in investment choices. The new rule, "Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights," will take effect sixty days after its publication in the Federal Register, although certain proxy voting provisions will not take effect until one year after publication. The rule was issued in response to President Biden's Executive Order 14030, which directs the federal government to highlight and consider policies to protect the retirement funds of American workers and families from ESG threats such as climate-related financial risk.

"Today's rule clarifies that retirement plan fiduciaries can take into account the potential financial benefits of investing in companies committed to positive environmental, social and governance actions as they help plan participants make the most of their retirement benefits," said Labor Secretary Marty Walsh.

Although DOL's new rule does not require plan fiduciaries to credit ESG factors in investments, it does allow them to assess ESG-related benefits while still adhering to the principle that fiduciaries must not accept reduced returns or g......................

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