Simpson Thacher Discusses Final Labor Department Rule on ESG Investing, Proxy Voting

The U.S. Department of Labor (the “DOL”) recently issued a final rule (the “Final Rule”) that seeks to clarify the circumstances under which a fiduciary subject to ERISA may consider climate change and other environmental, social and governance (“ESG”) factors when making investment decisions (and exercising shareholder rights) on behalf of ERISA plans and “plan asset” vehicles.[1]

Background

For nearly 40 years, the DOL has issued guidance that sought to provide a framework for ERISA fiduciaries considering investments for reasons other than investment performance (i.e., “collateral factors”). ESG investing, impact investing, … Read more