By LEIF UTNE
As the popularity of ESG investing grows, Wall Street is pushing back. Under pressure from trade groups like the US Chamber of Commerce, Business Roundtable (BRT), and National Association of Manufacturers (NAM), Trump administration officials are attempting to rewrite the federal rules that enable shareholders to hold corporate management accountable to investors' concerns on environmental, social, and governance issues.
On June 23rd, the US Department of Labor (DOL) proposed new regulations that would make it significantly harder for managers of employee retirement funds – which hold trillions of dollars in investment assets - to consider ESG factors in their investment decisions. The new rules are fast-tracked to take effect before the November elections, which would make them far more difficult for a new administration to undo, should a Democrat win the White House.
Newground is working with sustainable investment colleagues to hold the line against this assault on sensible, long-term, responsible investing. We will alert clients to opportunities to submit public comments on the proposed rules.
This DOL action comes on the heels of other efforts led by Securities and Exchange Commission chair Jay Clayton to silence ESG shareholder activism.
Last November, on a party-line vote, the SEC proposed draconian new rules that would regulate proxy advisory firms and make it dramatically more difficult to get shareholder proposals included in annual corporate proxies.
The rule changes were originally slated to take effect in April. However, due to the COVID-19 pandemic, the rule-making process has been delayed – though is still an active fight.
DOL Rule: The deadline for public comments on the Labor Department's proposed new rule on employee retirement funds is July 30, 2020. To read the full text of the DOL proposal and submit a public comment, visit: https://www.federalregister.gov/d/2020-13705
SEC Rules: The SEC's new rule regulating proxy advisory firms, which Newground strongly opposed, took effect on July 22. The agency's proposed changes to the shareholder proposal process (SEC Rule 14a-8) are still pending. Watch this space for further updates.