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New ESG regulation proposals

October 07, 2022

Proposed ESG Regualtion  For those of you who are concerned about ESG...on either side of the argument, should take note of new regulations coming out for retirement plans expected by the end of this year. The Biden administration who clearly wants to clear the way for retirement plan sponsors to add ESG funds to their retirement plan lineup, issued Executive Order 13990 of January 20, 2021, titled Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis, and Executive Order 14030 of May 20, 2021, titled Climate-Related Financial Risks.” That in turn caused the Department of labor to submit for review on Oct. 6 to the White House’s Office of Management and Budget as “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights See attached for more history. DOL proposes new regs 

No matter what side of the argument you are on, these new regulations seem to pave the way to add ESG mandated funds to Plan Sponsors 401(k) plans without so much worry of litigation that it may not be in the best interest of the plan participants.  Fear not! if you disagree with their additions I am sure that most if not all 401(k)s will continue to have other "normal" funds in the lineup that you can still choose from. If you agree with the additions then you are in luck and will be able to have your selections available in many plans. 

So regardless if you are a Plan Sponsor considering these changes or a plan participant wanting to know how you should invest your assets, it is very important to seek advice.  Saling Simms Associates can help on both sides. With plan sponsors, we can help shore up your investment policy statement when adding or not adding these types of investments. For Plan participants, we have just opened up the capability to manage your 401(k) assets much like we do your individual portolios making plan allocation decisions and enacting them for you to stay on top of your personal financial wellness.  Whether plan participant or plan sponsor call our office to see what we can do for you as we remain committed to your financial future.