PLANADVISER - March/April 2021 - 8

compliance news //
actions and the
latest
information
about climate and environmental,
social and governance (ESG) investing.
The unveiling of the webpage follows
the announcement that the SEC has
created a Climate and ESG Task Force
in the Division of Enforcement.
Consistent with increasing investor
focus and reliance on climate and
ESG-related disclosure and investment,
the Climate and ESG Task Force
will develop initiatives to proactively
identify ESG-related misconduct. It
will also coordinate the use of division
resources-including through the use
of sophisticated data analysis-to mine
and assess information across registrants
to identify potential violations.
Its initial focus will be to identify
any material gaps or misstatements
in issuers' disclosure of climate risks
under existing rules. When the agency's
Division of Examinations announced
its 2021 examination priorities, it said
they would include a greater focus on
climate-related risks (see " The SEC
Cites Its Priorities, " page 12).
In addition, a request by SEC Acting
Chair Allison Herren Lee for public
comment on climate-related disclosures
says the agency has decided to
evaluate its disclosure rules on climate
change. It is asking for investors, registrants
and other market participants to
supply their input by June 13. The SEC
says the consolidation of agency actions
and information on one webpage is
in response to investor demand for
climate and ESG investing information.
Multiemployer Plan Help
The American Rescue Plan Act
(ARPA)-i.e., the new stimulus bill-
allows failing multiemployer plans to
receive a lump sum of money to make
benefit payments through 2051.
Michael Clark, managing director
and consulting actuary with River and
Mercantile, says plans must file an
application for special financial assistance.
The Pension Benefit Guaranty
Corporation (PBGC) has 120 days from
the law's passage to issue regulations
or guidance about the process and to
specify effective dates. The legislation
says plans may use the money to
make benefit payments and pay plan
expenses, Clark notes. Multiemployer
plans must track the money they have
received and earnings on that money
separately from other funds. The
PBGC will issue rules about permissible
investments for the special assistance
funds. Unlike with the previously
introduced Butch Lewis Act, the
payment under the stimulus bill is not
a loan. " It's a bailout with no obligation
to repay, " Clark says. He explains there
... the Climate
and ESG Task
Force will develop
initiatives to
proactively identify
ESG-related
misconduct.
are two views of the bill. " There is an
argument that this will provide benefit
security for workers who had nothing
to do with the underfunding of these
plans. But, on the other side, this is a
blank check to cover unfunded liabilities
without incentivizing changes in
behavior. It doesn't prevent a plan from
getting into this situation in the future. "
Plans that receive money do face
conditions, though. They may not
prospectively reduce benefits, and they
must continue to pay PBGC premiums,
Clark says. In addition, an eligible
multiemployer plan that receives
assistance may not apply for benefit
cutbacks under the Multiemployer
Pension Reform Act of 2014 (MPRA).
DOL Puts a Hold on Enforcing
ESG and Proxy Voting Final Rules
The Department of Labor (DOL)'s
Employee Benefits Security Administration
(EBSA) will not enforce rules
on either the use of environmental,
social and governance (ESG) investments
within tax-qualified retirement
plans or proxy voting and shareholder
rights until it publishes further guidance.
Neither will it enforce those
final rules or pursue enforcement
actions against any plan fiduciary for
failing to comply with them. The DOL
said it will update the EBSA website as
more information becomes available.
The DOL published its final rule on
retirement plan investing, " Financial
Factors in Selecting Plan Investments, "
this past November 13. The final rule
said plan fiduciaries should select
investments and investment courses
of action based solely on consideration
of " pecuniary, " or financial, factors.
The rule, which no longer explicitly
referred to ESG, included some significant
changes compared with the DOL's
initial proposal, which would have
placed stricter limits on ESG investment
within retirement plans.
The DOL published its final rule
on " Fiduciary Duties Regarding Proxy
Voting and Shareholder Rights " this
past December 16.
It addressed obligations
of plan fiduciaries under the
Employee Retirement Income Security
Act (ERISA) to, before voting proxies,
consider participants' interests first.
A wide range of stakeholders,
including asset managers, plan sponsors
and consumer groups, questioned
whether the two rules properly
reflected the scope of fiduciaries' duties
under ERISA to act prudently and solely
in the interest of plan participants and
beneficiaries. The
stakeholders
also
questioned whether the DOL rushed
the rules through under the previous
administration and failed to adequately
consider public comments on the value
of ESG in improving long-term investment
returns for retirement investors.
The stakeholders told the DOL that
the ESG rule was deterring sponsors
from using ESG in their investment
decisions.
In a mid-March statement, the
Insured Retirement Institute
(IRI)
said it supports the DOL's decision not
to enforce the two regulations. " We
strongly support today's decision by the
DOL to temporarily forgo enforcement
of the ESG and proxy voting rules, "
Jason Berkowitz, IRI chief legal and
regulatory affairs officer wrote. " This
will provide an opportunity for the
department to re-evaluate and possibly
review or withdraw them. " -PA
8 | planadviser.com March-April 2021
http://www.planadviser.com
PLANADVISER - March/April 2021

Table of Contents for the Digital Edition of PLANADVISER - March/April 2021
