ERISA Confronts ESG

Abstract

Environmental, Social and Governmental issues, (“ESG”), has been paired with “Human Capital” issues in a sweeping movement that has progressed from university theories to the board rooms of some of the world’s biggest corporations over the last decade. There has also been a rapid growth of investments funds that advertise consideration of ESG and related issues. A practical question is whether employee benefit plans that are subject to strict regulations under the federal law known as ERISA can incorporate ESG considerations in selecting investments for these plans. At present, there is a distinct split of authority due to conflicting rules by the US Department of Labor. This paper will explore some of the key issues regarding ERISA and ESG.