(September 2020)

Anyone who invests significantly in ESG will already be aware: the DOL is going after the ESG sector and has a proposal making progress that would bar the inclusion of ESG funds in 401(k)s. The push—which the DOL seems very committed to—comes despite the fact that almost everyone in the wealth and asset management spaces says there is no real problem. The DOL is making the rule because it fears that ESG funds could be against a client’s long-term economic interests. However, according to BlackRock, over the last ten years “94% of sustainable indexes outperformed traditional indexes”. BlackRock and Fidelity have both come out publicly against the rule, with the latter publishing an 11-page letter to the DOL which said the rule was not “well grounded or supported by much of the emerging data”.



FINSUM + Magnifi: The DOL is trying to solve a problem that does not exist, and it is not just about fiduciary interests. According to the industry insiders,“This proposed regulation isn’t about something that’s wrong with how ESG is used by fiduciaries … It’s about promoting investment in energy in ERISA plans”.



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