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Pressure for Labor Department to boost ESG options for Retirees

Washington, DC: According to Labor Department statistics, more than $10 trillion in assets are included in the U.S. Retirement Plans from the Department and they benefit more than 150 million American workers and their dependents. According to data, retirement accounts are also the most popular vehicle for investors to invest in capital markets. They are also considered an important means to be used to help increase the economic development of emerging markets.

However, experts have estimated that approximately $6 trillion of total assets invested in retirement plans can not be classified as having a direct impact on environmental, social and governance issues. This figure is larger than the GDP of many countries worldwide.

As the Labor Department mulls a proposed rulemaking on environmental, social and governance investment options by retirement plans, advisers say the rules are likely to temper a “chilling effect” caused by the prior administration’s guidance. Advisers say more retirement savers are asking about ESG investing.

The United States Department of Labor is a cabinet-level department of the U.S. federal government, responsible for occupational safety and health, wage and hour standards, unemployment benefits, reemployment services, and occasionally, economic statistics. Many U.S. states also have such departments.

As the Labor Department mulls a proposed rulemaking on environmental, social and governance investment options by retirement plans, advisers say the rules are likely to temper a “chilling effect” caused by the prior administration’s guidance.

Advisers say more retirement savers are asking about ESG investing and that the forthcoming rules could place them on equal footing with many retail and institutional investors who examine factors such as environmental sustainability and corporate responsibility on social issues alongside traditional financial metrics.

President Joe Biden also issued an executive order that directed federal agencies to consider financial risks tied to climate change. The order specifically asked the Labor Department to consider rescinding the previous administration’s rule while taking steps to protect worker pensions and retirement savings. They should take a tip from the Teachers of Texas.

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ESG: The New Way of Doing Business in Washington, DC

Business and organizational sustainability is a complex issue in Washington, with many stakeholders and perspectives. It’s also an area where the stakes are high – if we don’t get it right, there will be dire consequences for our communities and the planet.

The good news is that more investors are taking notice of ESG issues when they invest in Washington companies and organizations. In fact, over the past decade institutional investors have been increasingly incorporating Environmental, Social and Governance factors into their investment decisions. And soon it will be impossible to win any RFP’s without it.

We want everyone (not just big institutions in Washington) to be able to incorporate ESG-related risk into their actions because Companies that don’t adapt to these changes will not survive. This change has many companies in Washington scrambling to figure out how they can stay competitive and be profitable while also contributing to a better future.

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