The Employee Retirement Income Security Act of 1974 (ERISA), requires pension plan fiduciaries to make investments to maximize the return and value to the plan’s beneficiaries. In 1994, in its Interpretive Bulletin 94-1, DOL said fiduciaries would not be violating their obligations if they take into account factors other than maximizing return and value, such as “socially responsible investing, sustainable and responsible investing, environmental, social and governance (ESG) investing, impact investing, and economically targeted investing (ETI).”

In October 2008, in its Interpretive Bulletin 08-1, DOL withdrew that Interpretation and substituted one that said its “purpose was to clarify that fiduciary consideration of collateral, noneconomic factors in selecting plan investments should be rare and, when considered, should be documented in a manner that demonstrates compliance with ERISA's rigorous fiduciary standards” (underscoring mine).

Last month, DOL issued a new Interpretive Bulletin withdrawing the 2008 one – particularly the “rare” description and special documentation admonitions - and reinstating the 1994 one, because:

. . . the Department is concerned that the 2008 guidance may be dissuading fiduciaries from (1) pursuing investment strategies that consider environmental, social, and governance factors, even where they are used solely to evaluate the economic benefits of investments and identify economically superior investments, and (2) investing in ETIs even where economically equivalent. Some fiduciaries believe the 2008 guidance sets a higher but unclear standard of compliance for fiduciaries when they are considering ESG factors or ETI investments.

. . . plan fiduciaries should appropriately consider factors that potentially influence risk and return. Environmental, social, and governance issues may have a direct relationship to the economic value of the plan's investment.  In these instances, such issues are not merely collateral considerations or tie-breakers, but rather are proper components of the fiduciary's primary analysis of the economic merits of competing investment choices.

At least one commentator reads the new DOL Interpretive Bulletin as indicating the government will require plan fiduciaries to favor “green investments.”