DOL requests comments on protecting retirement savings from climate-related financial risks
Among other things, the DOL is asking whether there's a need to educate plan participants about such risks and if so, what role EBSA should play?
The Labor Department wants to know what steps it can take under current law to protect life savings and pensions of U.S. workers from the threat of climate-related financial risk.
“Some material suggests that when plan participants know their plan offers [Environmental, Social and Governance] options, many will invest in them,” the department said, in requesting the information.
Comments must be submitted on or before May 16.
In its request for comment published this week, EBSA noted the difference between this request and its controversial October request. In that October request, the department proposed a rule under ERISA to make it clear that plan fiduciaries may consider climate change and other Environmental, Social and Governance considerations when they make investment decisions.
That rule has prompted a political outcry. Conservatives have said that fiduciaries should not take ESG issues into account. However, progressives contend that the proposed rule simply brings clarity to the issue and that it does not expand fiduciaries’ responsibilities.
In the new request for information, the Labor Department said that on May 20, 2021, President Biden issued an Executive Order outlining a “whole-of-government approach to mitigating climate-related financial risk and to safeguarding the financial security of America’s workers, families, and businesses from the threat that climate change poses to their life savings.”
One section of that order directs the Labor Department to ensure the resilience of workers’ life savings and pensions through a series of actions.
The request for information lists a series of questions for commenters to address, including:
- What actions can EBSA take under ERISA to protect Americans’ life savings and pensions from ESG risks?
- What are the most serious climate-related financial risks for retirement savings?
- Should plan administrators be required to publicly report on the steps they are taking to reduce climate risks?
- What are the best sources of information for plan fiduciaries to use in evaluating climate risk to plan investments?
- Are there legal or regulatory issues that hinder managers of savings and retirement plan not covered by ERISA from taking steps to mitigate climate-related financial risks to those investments?
- Is there a need to educate plan participants about those risks and if so, what role should EBSA play in providing that information?