ESG Considerations for ERISA Fiduciaries

I recently moderated a panel for Fi360 called, “ESG Considerations for ERISA Fiduciaries.” Here is a link to the recording.

I was joined by Ali Caffery of Envestnet and Jason Blackwell of Mercer. Too many ESG panels either sidestep the fiduciary issues altogether or discuss them in such abstract terms so as to not be terribly useful. We took a practical approach and walked the audience through some of the key issues a fiduciary should take into account when considering an ESG strategy. We received really strong feedback. I want to thank again Blaine Aikin and his entire team for allowing us to speak on this important topic!

Litigator Bill Mandia Provides Key Context on the States’ Latest Efforts re. the DOL Fiduciary Rule

Undeterred by the Fifth Circuit’s rejection of their request to intervene in U.S. Chamber Commerce v. U.S. Dep’t of Labor, the States of California, New York, and Oregon moved for reconsideration in the Fifth Circuit today. The States request that the three-judge panel who heard the appeal reconsider their denial of the States’ petition to intervene or, at a minimum, refer the question of intervention to the entire Fifth Circuit for a rehearing en banc.  The States previously requested a rehearing en banc, which the court rejected as improper because the States are technically not parties to the appeal.  The States’ motion notes that the business groups that filed the action against the DOL will oppose their request and that the Department of Justice, on behalf of the DOL, takes no position on it.

It remains to be seen how the panel addresses the request, but for the reasons discussed in our prior blog post, the States face an uphill battle.  It is unlikely that the panel will reconsider its prior ruling and allow the States to intervene because the States have not presented any new lines of evidence or argument that were unavailable to them when they made their original request to intervene.  While a 2-1 decision on a significant issue always raises the possibility of a rehearing en banc, the relative weakness of the States’ arguments regarding intervention may lead the panel to conclude, even in a 2-1 vote, that the issue is not worth the entire Fifth Circuit’s time.

Growth of Sustainability Strategies in US Passive Funds

As highlighted by Ignites, Morningstar recently released a report on the growth of assets in passive funds pursuing a sustainable strategy. Interestingly, about half of the funds are thematic. Unsurprisingly, virtually all are equity funds. The US market for these types of funds continues to lag other regions, though that gap is not unique to ESG passive funds, and applies to ESG broadly.

FX Service Providers Should Watch DOL Fiduciary Rule Developments

As I wrote in Profit & Loss last year, FX service providers, particularly those in an agency capacity, should continue to monitor the fate of the DOL Fiduciary Rule, particularly for straddling the line between pure sales/marketing and those communications that may give rise to a “recommendation” under the 2016 rule. Hedging managers will stand to benefit if we revert to the 1975 rule.