Live Blogging: A look at ESG

Greetings from Scottsdale! It’s great to be here discussing how a fiduciary can incorporate ESG factors into an investment process in a manner consistent with fiduciary obligations. (Last night, I also talked about the state fiduciary developments, with NJ forthcoming). Shareholder engagement is a popular approach to addressing ESG risks, and recent activity from the DOL and SEC highlight the need to be aware of fiduciary risk when directly engaging company boards (or voting proxies) or relying on others to do so. I suspect there be will more and more focus on shareholder engagement and the costs incurred, perhaps more so than other ESG strategies (e.g., positive screens, etc.) ultimately.

Countdown to Stradley/Fidelity/ICI webcast on SEC standards of conduct proposal

On October 4 at 11 am (EDT), David Grim and Larry Stadulis of Stradley’s Fiduciary Governance Group will be joined by Fidelity Management and the Investment Company Institute to discuss the potential impact of the SEC’s Best Interest Proposals on the fund industry, and more specifically:

  • Key Themes in the Comment Letters
  • Impact on Fund Distributors, Dealers and Funds, including Non-Cash Compensation and Other Distribution Practices
  • Evolving Process and Future Suitability Concerns

David Grim is former Director of the SEC’s Investment Management Division. This will surely be an informative discussion.

Please click here to register.

Quality over quantity when it comes to climate change-related disclosures

According to Pensions & Investments, we are seeing a greater number of climate change-related disclosures by companies across sectors, as recommended by the FSB Task Force. Companies continue to take disparate approaches to the content and scope of disclosure. Importantly, the article notes: “While many companies describe climate-related risks and opportunities, few disclose the financial impacts of climate change on their firms.” Clarity on the effect of climate change on firm performance will be essential to a fiduciary’s determination that climate change has a material effect on investment performance for purposes of its duties of prudence and loyalty under ERISA. The DOL’s recent guidance on ESG investing confirms the need to have this clear link in mind and the supporting documentation in hand. Connecting the dots will be imperative.

Is New Jersey’s forthcoming “uniform fiduciary standard” a harbinger of things to come?