The Labor Department’s shifting guidance also doesn’t appear to have an impact on ESG investing, Gotbaum said. Whether or not the DOL encourages economically targeted investing or proxy activity, the decision “has always been and will always be up to the fiduciaries themselves.”
James Cole II, a lawyer with Groom Law Group in Washington, echoed Gotbaum, telling Bloomberg Law the impact of the changes in guidance “remains to be seen.”
The guidance is arguably more restrictive than prior guidance under the Obama administration and technically reaffirms the “all thing things being equal test” for investments introduced by the Bush administration, Cole said.
Christopher B. Burnham, former Connecticut state treasurer and former undersecretary general at the United Nations, praised the new guidance.
“It’s a commitment by the DOL to promote honesty and transparency in our pensions,” Burnham, who is now president of the Institute for Pension Fund Integrity, told Bloomberg Law.
Investors shouldn’t “play politics with other people’s money,” he said.