‘Do-Good’ Retirement Investing Could Get Costlier for Employers

Plan fiduciaries who seed their retirement programs with environmental, social, and corporate governance (ESG)-focused funds that are “economically indistinguishable” from other investments would need to document that decision-making under a new proposal.

The Labor Department released the proposed rule Tuesday. Senior administration officials said the guidance, which follows up on an executive order from April 2019, reinforces the protections enshrined in the Employee Retirement Income Security Act of 1974 by reminding fiduciaries they must never sacrifice the financial security of participants in order to promote other objectives.

Choosing ESG-related investments that demand higher fees, produce lower returns, or incur greater ...