Much was made of the President’s April 10th Executive Order that directed the Secretary of Labor Alex Acosta to re-examine the DOL’s guidance on proxy voting. The Executive Order was focused on energy production, so a reasonable inference is that the DOL could tighten the screws on how ERISA fiduciaries engage in proxy voting and other forms of shareholder engagement when taking into account ESG risks. Our initial description and analysis of the Executive Order can be found here. Today, Pensions & Investments published an op-ed of mine, which seeks to put the Executive Order into context for ERISA fiduciaries, particularly those who are taking ESG factors into account when they vote proxies on behalf of plans. I note, for instance, that adding a more rigorous test for including ESG factors into proxy voting decisions “could not be so onerous as to make divestment preferable to engagement, as that would seem to undermine the executive order’s very purpose.”
George Michael Gerstein advises financial institutions on the fiduciary and prohibited transaction provisions of ERISA. As co-chair of the fiduciary governance group, he assists clients with tracking, and understanding, the numerous fiduciary developments at the federal and state levels, including the rules and regulations of governmental plans. He also advises clients with respect to the fiduciary duty implications of ESG investing.