An impassioned debate about environmental, social, and governance (ESG) issues took center stage last week, when the Department of Labor downgraded the economic relevance of ESG investments—just as companies and investors gathered at an event to discuss their importance.
On April 23, the U.S. Department of Labor published new guidance cautioning financial managers that investments based on ESG factors may not always be a “prudent choice.” Specifically, the Labor Department said, fiduciaries of private-sector employee benefit plans covered by the Employee Retirement Income Security Act (ERISA) “must not too readily treat ESG factors as economically relevant to the particular investment choices at issue when making a decision.”
