In the United States, the Department of Labor’s (DOL) guidance for private sector plans identifies ESG factors as proper components of investment analysis, but does not fully address uncertainties plans may face. In particular, sponsors of defined contribution plans face uncertainty about whether they may use ESG factors in a qualifying default fund—a widely used option in which a fiduciary is generally not liable for investment losses. DOL’s mission includes assisting and educating plan fiduciaries. Providing clearer information about how to use ESG factors would help fiduciaries better understand whether and how to consider these potentially material risks. DOL is also considering steps to collect data on the use of ESG factors by retirement plans.
As we noted during the course of meetings on your study, the Department's leadership was independently reviewing the 2015 and 2016 IBs, and considering possible further actions in connection with those IBs. On April 23, 2018, EBSA released Field Assistance Bulletin (FAB) 2018-01 to assist EBSA's national and regional staff in addressing questions they may receive from plan fiduciaries and other interested stakeholders about the IBs. Although not technically issued in response to your report, the FAB includes discussions of issues raised in your report. The FAB is publicly available at www.dol.gov/ebsa. We are available to discuss the additional explanation of the Department's views expressed in the FAB. We appreciate GAO's valuable research in this area summarized in the report. We also will carefully consider GAO's discussion of some of the central issues involved in the use of ESG factors in retirement plan investing as we continue the Department's ongoing compliance assistance program to help employers, plan officials, service providers, and others comply with ERISA. At this point, we believe it would be appropriate to evaluate the public reaction to your report and the FAB before reaching any conclusions about the necessity or appropriateness of issuing further guidance in this area.