On April 23, 2018, the U.S. Department of Labor issued Field Assistance Bulletin No. 2018-1, which provides guidance on environmental, social and governance (“ESG“) issues.

The Bulletin’s stated purpose is to provide guidance to the Employee Benefits Security Administration’s to assist in addressing questions they may receive from ERISA plan fiduciaries and other interested stakeholders about two previous DOL bulletins, Interpretive Bulletin 2016-1 relating to exercise of shareholder rights and written statements of investment policy, and Interpretive Bulletin 2015-01 relating to “economically targeted investments.” The Bulletin notes that the DOL has a longstanding position that ERISA fiduciaries cannot sacrifice investment return or take on additional investment risk as a means of promoting collateral social policy goals. The Bulletin states that ERIS fiduciaries must always put the economic interests of the ERISA plan first in making investment decisions, and that fiduciaries “must not too readily treat ESG factors as economically relevant to the particular investment choices at issue when making a decision.” The Bulletin also notes that ESG issues could constitute material business risk or opportunities to companies that would be treated as economic considerations under generally accepted investment theories, and that to the extent ESG factors involve business risks or opportunities that are properly treated as economic considerations in evaluating alternative investments, the weight that the fiduciary gives to those factors should be “appropriate to the relative level of risk and return involved compared to other relevant economic factors.”