What Fund Managers Should Know About the DOL’s Proposed Rule on ESG Factors and Proxy Voting

The U.S. Department of Labor (DOL) recently released a proposed rule (Proposal) that would amend the DOL’s investment duties regulation with respect to the consideration of environmental, social and governance (ESG) factors in the selection of investments for retirement plans that are subject to the Employee Retirement Income Security Act of 1974 (ERISA). The Proposal would also amend the proxy voting rules under ERISA. The DOL requested comments on the Proposal that must be submitted on or before December 13, 2021. In a guest article, Beth J. Dickstein, partner at Sidley Austin, reviews the background of the Proposal; discusses the Proposal’s provisions as to ESG investing and proxy voting; and explores the Proposal’s possible impact on hedge and other private fund managers. For additional insights from Dickstein, see our three-part series on ERISA considerations for European hedge fund managers: “Liability and Incentive Fees” (Sep. 24, 2015); “Prohibited Transactions, Reporting and Side Letters” (Oct. 1, 2015); and “Indicia of Ownership and Bond Documentation” (Oct. 8, 2015).

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