The U.S. Department of Labor on Tuesday authorized companies that manage employee retirement savings to consider environmental, social and governance (ESG) criteria in their investments, reversing the Trump administration’s restrictions. The latter did not impose an official ban, but considered that so-called ECG investments were presented “gaps in analysis rigor” on the prudence and fiduciary duties that pension funds must respect.
The rule passed in late 2020, shortly before Joe Biden arrived in the White House, accordingly instructed pension plan managers to focus on the financial interests of beneficiaries rather than other nonprofit goals, whether financial or political. The new rule announced on Tuesday “clarifies” The fact that those responsible for pension plans can use ESG criteria was emphasized by the current Minister of Labor, Marty Walsh, quoted in the press release.
This topic has become a new hobby in recent months for several Republican officials in the United States, who believe that taking ESG criteria into account in financial decisions is an ideological position. Legislators in Florida, Texas and West Virginia, among others, have taken steps to limit their use.
Increasing popularity of responsible investment
However, responsible investments have gained popularity in recent years among investors or managers who are more sensitive to these issues or believe that they make it possible to limit financial risks in the long run. As You Sow, an organization that campaigns for corporate environmental and social responsibility, welcomed the initiative.
“Ignoring climate change, racial injustice, the violation of workers’ rights, or the mismanagement of employee pensions does not eliminate these risks.”Andrew Behar, head of the organization, said in a message sent to AFP. “As some officials exploit retirees’ hard-earned money for political gain, the administration’s new rule will protect employees and their families.”he assessed.
Source: Le Figaro
I am David Wyatt, a professional writer and journalist for Buna Times. I specialize in the world section of news coverage, where I bring to light stories and issues that affect us globally. As a graduate of Journalism, I have always had the passion to spread knowledge through writing.