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U.S. Labor Department proposes counter rule to Trump-era investment measures By Reuters


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© Reuters. FILE PHOTO: The Division of Labor headquarters is seen in Washington, D.C., U.S., Could 13, 2021. REUTERS/Andrew Kelly

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By Katanga Johnson

WASHINGTON (Reuters) -The U.S. Division of Labor on Wednesday proposed a rule aimed to override a pair of Trump-era measures that had barred retirement and pension plans from contemplating local weather change and different environmental, social and governance (ESG) elements after they choose investments.

The DOL proposal, which is topic to a 60-comment interval earlier than it may be adopted, comes after the company in March mentioned it could not implement the 2020 guidelines meant to curb investments based mostly on environmental and social elements, which cowl trillions of {dollars} in retirement accounts, and shareholder voting in company conferences.

Trump administration officers had mentioned the principles centered funding managers on retirees’ monetary pursuits and “materials” dangers to returns, reasonably than doable political points.

The company’s Wednesday proposal, nonetheless, responds to criticism by buyers and their advocates who’ve pushed corporations on company ballots to deal with points starting from systemic racism to local weather change, and say the business-friendly measures adopted beneath Trump had been misguided.

The proposal follows a Could Govt Order that President Joe Biden signed to direct the federal authorities to implement insurance policies that assist safeguard American households from climate-related monetary danger.

It could “bolster the resilience of staff’ retirement financial savings and pensions by eradicating the synthetic impediments – and chilling impact on environmental, social and governance investments – attributable to the prior administration’s guidelines,” mentioned Ali Khawar, an appearing assistant secretary at DOL.

“Local weather change and different ESG elements might be financially materials and when they’re, contemplating them will inevitably result in higher long-term risk-adjusted returns.”

Lisa Woll, who runs the Washington-based U.S. SIF: the Discussion board for Sustainable and Accountable Funding, applauded Wednesday’s proposal for recognizing the proxy vote as an “possession proper” and eradicating provisions that will have discouraged fiduciaries from exercising these as such.

“This proposal ought to assist deal with the hole between the expansion of sustainable funding total and the way more restricted progress of sustainable funding in retirement plans.”

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