Some of you may have heard about two new interpretive bulletins issued by the Department of Labor, championed by the US Chamber of Commerce, offering clarification on the use of supposed “non-economic factors” in the investment of pension funds governed by Employee Retirement Income Security Act (ERISA) regulations. Various elements of the media have suggested that this is a “thumbs down” to the use of Socially Responsible Investing (SRI) investment criteria. This is matter of some disagreement. Here is a link to the story.

I think that the current economic crisis underscores the reality that environmental, social and governance (ESG) factors clearly are indeed (in many cases) “economic factors.” So I’m not sure the claims of these media stories is particularly accurate. Had dutiful, “fiduciary” trustees - particularly in long-term focused ERISA plans - looked beyond Wall Street dogma to consider the economic implications of certain “social” (dare I say “moral”) factors at work in the markets, we very well might not be having this conversation. In fact, we may well be coming close to the day when a REFUSAL to look at the potential economic implication of ESG issues may be deemed a BREACH of fiduciary duty.

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