WASHINGTON, D.C. – In comments submitted today to the U.S. Department of Labor, the American Council on Renewable Energy (ACORE) challenged the Department’s recently proposed rule aimed at discouraging proxy voting under Title 1 of the Employee Retirement Income Security Act (ERISA).
“Grounded in the demonstrably false assumption that ESG considerations are unrelated to financial performance, the Labor Department presumes to substitute its own voting preferences for the considered judgment of seasoned investment professionals exercising one of the most basic rights of stock ownership at the heart of fiduciary duty,” said ACORE President and CEO Gregory Wetstone. “This proposal imposes needless new bureaucracy and substantial additional costs. Absent considerable modification, it should be immediately withdrawn.”
In its filing, ACORE makes the following arguments:
- The proposed rule is redundant to the requirements of existing law and therefore unnecessary to protect the interests of investors.
- Rather than providing additional clarity around fiduciary compliance, the proposed rule is instead likely to sow increased confusion and impose excessive regulatory burdens on ERISA fiduciaries.
- According to the Department’s own analysis, the proposed rule will impose added costs on plan participants and beneficiaries, unless fiduciaries abandon their voting rights or adopt the Department’s voting preferences.
- The proposed rule offers no evidence of harm to ERISA plan participants or beneficiaries due to current proxy voting practices and fails to quantify any purported benefit for its consideration.
- The proposed rule appears to be grounded in an erroneous assumption that ESG considerations are unrelated to financial performance and inappropriately substitutes that erroneous assumption for the considered judgment of seasoned investment professionals.
- There are too many other aspects of the proposed rule whose practical application would adversely impact ERISA fiduciaries, plan participants and beneficiaries.
- The Department should modify the proposed rule to clarify that ERISA’s fiduciary duties require qualified investment professionals to vote in favor of proxies that better align holdings with ESG metrics when they prudently determine that doing so is in the economic interest of plan participants and beneficiaries.
- The Department should extend the unusually short 30-day comment period to 120 days to allow the full range of affected parties to express their concerns.
This proposed rule on proxy voting and shareholder rights follows the Department of Labor’s attempt this past summer to directly limit ESG investments in ERISA plans. ACORE forcefully pushed back on that proposed rule, which is now awaiting final action by the Department.
To download a copy of ACORE’s submitted comments, go to https://acore.org/acore-comments-on-dol-proxy-voting-proposed-rule/.
Founded in 2001, the American Council on Renewable Energy (ACORE) is the nation’s premier pan-renewable organization uniting finance, policy and technology to accelerate the transition to a renewable energy economy. For more information, please visit www.acore.org.
Alex Hobson, Vice President of Communications, ACORE
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