{"id":19391,"date":"2020-08-28T09:00:10","date_gmt":"2020-08-28T13:00:10","guid":{"rendered":"https:\/\/www.benefitscanada.com\/news\/u-s-push-to-further-regulate-esg-products-in-caps-could-hurt-members-149339"},"modified":"2020-08-28T09:00:10","modified_gmt":"2020-08-28T13:00:10","slug":"u-s-push-to-further-regulate-esg-products-in-caps-could-hurt-members","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2020\/08\/28\/u-s-push-to-further-regulate-esg-products-in-caps-could-hurt-members\/","title":{"rendered":"U.S. push to further regulate ESG products in CAPs could hurt members"},"content":{"rendered":"
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Staff<\/span> | August 28, 2020 <\/p>\n

The U.S. Department of Labor is taking jabs at the inclusion of environmental, social and governance products in capital accumulation plans \u2014 and it could be to members\u2019 detriment.<\/p>\n

In late June, the Department of Labor proposed new rules around ESG products in retirement accounts. \u201cThe proposal is designed, in part, to make clear that . . . plan fiduciaries may not invest in ESG vehicles when they understand an underlying investment strategy of the vehicle is to subordinate return or increase risk for the purpose of non-financial objectives,\u201d noted a release from the department.<\/p>\n

However, a recent blog by Jennifer DeLong, head of defined contribution at AllianceBernstein, and Michelle Dunstan, the firm\u2019s global head of responsible investing, said the regulations proposed could unnecessarily deter plan sponsors from offering ESG options.<\/p>\n

Read: CFA Institute proposing industry standards for ESG disclosure<\/a><\/strong><\/p>\n

They noted the proposed rules aren\u2019t a major shift from what\u2019s already in place. \u201cThe new rules wouldn\u2019t prohibit ESG options, but they could encumber the selection and monitoring process. For example, plan sponsors would need to do a lot more documenting to validate any ESG considerations on top of the current \u2018all else being equal\u2019 test. The rules would also all but preclude an ESG purpose-driven fund from serving as a qualified default investment alternative. We think these measures are overly restrictive, which could lead sponsors to turn away from funds with any hint of ESG.\u201d<\/p>\n

Notably, interest from both plan sponsors and members around ESG options is growing, said the blog. In its own research, AllianceBernstein found 67 per cent of plan sponsors said they\u2019ve been asked about ESG options and 66 per cent said they felt ESG integration, in terms of applying ESG factors to fundamental investment analysis, is part of their fiduciary duty.<\/p>\n

Read: Most Canadian institutional investors engaging in ESG issues: survey<\/a><\/strong><\/p>\n

However, with this interest comes confusion, noted Dunstan and DeLong. Almost half (42 per cent) of plan sponsors said their biggest obstacle around ESG is understanding the differences between the variety of ways they could offer it.<\/p>\n

\u201cShunning all ESG would be unfortunate for participants because, as we see it, ESG considerations must be a critical component of in-depth fundamental research in any investment solution, whether it has an ESG label or not,\u201d they said.<\/p>\n

Read the full article at BenefitsCanada.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Staff | August 28, 2020 The U.S. Department of Labor is taking jabs at the inclusion of environmental, social and governance products in capital accumulation plans \u2014 and it could be to members\u2019 detriment. In late...<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/19391"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=19391"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/19391\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=19391"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=19391"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=19391"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}