- U.S. Department of Labor proposes rule changes that could make impact investing more difficult, by limiting funds’ ability to take ESG issues into account for investments and limiting shareholders’ ability to use proxy votes to influence companies.
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This week marks the 50th anniversary of economist Milton Friedman’s influential essay “The Social Responsibility of Business Is to Increase Its Profits” — an idea that is even more controversial today than it was then. Which brings us to two proposed rules from the U.S. Department of Labor that could dramatically change impact investing:
- “Financial Factors in Selecting Plan Investments”: This policy would make it harder for fund managers to take environmental, social and governance issues into account when making investments because “financial benefits…must be paramount.” It’s a restriction that is already opposed by major asset managers, including Fidelity and BlackRock.
- “Fiduciary Duties Regarding Proxy Voting and Shareholder Rights”: This proposal would restrict retirement plans’ rights to use proxy votes and shareholder resolutions to hold companies’ leaders accountable for their actions. It comes as activist shareholders are increasingly using resolutions to get companies to pay more attention to climate change and other ESG matters.
Public comments on both proposals have been overwhelmingly negative. The Department of Labor is expected to make a final ruling on the new rules by the end of the year.
In Other News: ‘Impact Transparency,’ Stress-Free Pepsi
More than 300 impact investing leaders signed the GSG’s declaration in support of “impact transparency.” COVID-19 has created “stress-free soda.” The World Economic Forum launched a new COVID-19 Social Enterprise Action Agenda. Nestle is committing to 100% recyclable or reusable packaging by 2025. A new online tool tracks the financial institutions divesting from coal. Green brewer BrewDog’s latest equity crowdfunding round will go toward its own carbon-negative goal.
Levity Break
This “totally beast” New York State PSA for mask-wearing is definitely starring a Young Person and not a 51-year-old actor named Paul Rudd.
