US SIF, investor organizations and financial industry firms’ analysis of public comments on department of labor ESG proposal shows landslide of opposition

US SIF, investor organizations and financial industry firms' analysis of public comments on department of labor ESG proposal shows landslide of opposition

WASHINGTON, D.C., Aug. 20, 2020 – Several investor organizations and financial industry firms today released an analysis of the more than 8,700 public comments on the Department of Labor's (DOL) proposed rulemaking on the consideration of environmental, social and governance (ESG) considerations in ERISA-governed retirement plans. There is overwhelming opposition to the “Financial Factors in Selecting Plan Investments” proposal.

Of the 8,636 total comments in the analysis after removing the 101 extension requests and duplicates, more than 95 percent of comments opposed the DOL's proposed rulemaking. Only 4 percent of comments expressed support, and 1 percent expressed neutral views or recommended changes without clearly expressing support or opposition. Public comments were overwhelmingly opposed across individuals, investment-related groups, and non-investment-related groups. The 30-day public comment period ended on July 30.

Participating organizations in the categorization and analysis of public comments include US SIF: The Forum for Sustainable and Responsible Investment, Ceres, Intentional Endowments Network (IEN), the AFL-CIO, the Interfaith Center on Corporate Responsibility (ICCR), Impax Asset Management and Morningstar, Inc. The group summarized the comments and the constituencies that made them to provide transparency and help the public, affected parties and regulators draw appropriate conclusions from the thousands of comments submitted.

Key findings of the analysis include:

  • The vast majority of commenters were individuals, reflecting significant grass-roots investor support for sustainable investing. Ninety-six percent of the 8,337 comments or petition signatures from individuals expressed opposition.
  • Opposition was especially high among investment-related groups, with asset managers, financial advisors, financial service providers, asset owners, pension plans, and investment organizations either unanimous or all but unanimous opposing the proposal. Among 229 comments from investment-related groups, 94 percent were opposed, 2 percent were in favor, and 4 percent were mixed or neutral.
  • A majority of non-investment-related firms and organizations opposed the rule, yet comments from this smaller group exhibited the highest levels of support. Among the 120 comments from non-investment-related firms and organizations, 37 percent of comments were in favor, a 57 percent clear majority of comments were opposed, and 6 percent were mixed or neutral.

The analysis also surfaced key themes among opposing comments:

  • DOL's proposal does not make a case for a problem that requires this rulemaking and, in particular, includes no evidence that fiduciaries choose investments that are likely to have lower returns in exchange for ESG criteria being considered.
  • The proposed rule largely dismisses the financial materiality of ESG issues and ignores research regarding the materiality of ESG in financial decision-making. 
  • The proposed rule is based on a flawed and unsupported assumption that ESG funds give up financial returns in favor of “non-pecuniary” rewards. 
  • Rather than subjecting fiduciaries who wish to utilize ESG criteria to additional burdens and restrictions, incorporating ESG factors into investment decisions should be considered a part of fiduciary duty.
  • Excluding ESG investments from Qualified Default Investment Alternatives (QDIAs) in Defined Contribution plans is inappropriate and could harm plan participants/beneficiaries
  • Singling out ESG for a heightened level of scrutiny and restriction is inappropriate.

US SIF Chief Executive Officer Lisa Woll said: “The overwhelming response reflects the growing interest in and asset flows to sustainable investing. Professionally managed assets utilizing one or more sustainable investment strategies grew 38% from 2016-2018 to more than $12 trillion.  Generating more hurdles to the incorporation of ESG criteria will have a chilling effect, leading to plan participants losing access to ESG options---many of which have outperformed their indices over time and especially during the market shock related to COVID 19. Limiting plan participant options and diversification opportunities should not be the role of the Department of Labor.”

Ceres CEO and President Mindy Lubber said: “As the comment letters confirm, ESG risks are often systemic risks that pose short, medium and long term financial risks to investment portfolios. The COVID-19 pandemic has been a devastating reminder of just how quickly lives and livelihoods can suffer and economies can falter when systemic risks are ignored. Investors understand climate change is a systemic risk that poses similar deadly and drastic consequences -- including price volatility and asset value losses -- across all sectors critical to our economy.”

AFL-CIO Deputy Director of Corporations and Capital Markets Brandon Rees said: “This proposed rule will create unnecessary and burdensome regulations that will discourage fiduciaries from making prudent investments that generate collateral benefits for communities and economic growth for working people. We request that the Department of Labor withdraw this proposed rule in its entirety, or at least schedule a public hearing to be conducted virtually in accordance with COVID-19 public health guidelines.”


Impax Asset Management LLC President Joe Keefe said: “Essentially, DOL is proposing to substitute its judgment, a judgment which may be more subject to political influences, for the judgment of investment practitioners on the ground who possess the responsibility and the expertise to design and administer retirement plans. The proposed rule effectively substitutes activist, big government fiat in place of the market.”

Morningstar Head of Policy Research Aron Szapiro said: “As we said in our comment letter, the Department of Labor's approach is out of step with the increasingly mainstream practice of incorporating ESG considerations into investment research, and this analysis reinforces that reality. The rule as proposed would take away important options from retirement investors and deny them access to analysis on mitigating ESG risks.”

Intentional Endowments Network Co-founder and Executive Director Georges Dyer said:  “Endowments have increasingly seen the benefits of ESG investing to reduce portfolio-level and system-level risk, enhance returns, and preserve capital -- and as a result, there is growing interest in exploring the integration of ESG options into their retirement plans. IEN's Sustainable Retirements Initiative  supports fiduciaries in their consideration of all financially material factors, including ESG factors, into their investment processes.  The DOL's proposal is likely to have the perverse effect of dissuading fiduciaries, even against their better judgment, from offering ESG options for their plans.  As a result, it will unfairly, and harmfully, limit plan diversification and perhaps compel plan participants to choose options that are either more risky or less profitable.”

ICCR Chief Executive Officer Josh Zinner said: “The proposed DOL rule is a thinly disguised political attack on ESG investing, with no legitimate factual basis.  As the overwhelming negative response demonstrates, investors across the spectrum see environmental, social, and governance factors as a critical part of the analysis of the long-term value of investments.”


About US SIF 

US SIF: The Forum for Sustainable and Responsible Investment is the leading voice advancing sustainable and impact investing across all asset classes. Its mission is to rapidly shift investment practices toward sustainability, focusing on long-term investment and the generation of positive social and environmental impacts. US SIF members include investment management and advisory firms, mutual fund companies, asset owners, research firms, financial planners and advisors, community investing organizations and nonprofit associations. Learn more at and follow @US_SIF.


About Ceres

Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. The Ceres Investor Network includes over 175 institutional investors, managing more than $29 trillion in assets, advancing leading investment practices, corporate engagement strategies, and key policy and regulatory solutions. 

For more information, please visit and follow @CeresNews

About the AFL-CIO

The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) works tirelessly to improve the lives of working people. It is the democratic, voluntary federation of 55 national and international labor unions that represent 12.5 million working men and women. 

About Impax Asset Management

Founded in 1998, Impax is a specialist asset manager with approximately GBP £15.0 billion / US $19.4 billion in both listed and real asset strategies, investing in the opportunities arising from the transition to a more sustainable global economy. Impax believes that capital markets will be shaped profoundly by global sustainability challenges, including climate change, pollution and essential investments in human capital, infrastructure and resource efficiency. These trends will drive growth for well-positioned companies and create risks for those unable or unwilling to adapt. Impax seeks to invest in higher quality companies with strong business models that demonstrate sound management of risk. Impax offers a well-rounded suite of investment solutions spanning multiple asset classes seeking superior risk-adjusted returns over the medium to long term. 

About Morningstar

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The Company offers an extensive line of products and services for individual investors, financial advisors, asset managers, retirement plan providers and sponsors, and institutional investors in the debt and private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, debt securities, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with approximately $205 billion in assets under advisement and management as of June 30, 2020. The Company had operations in 27 countries as of June 30, 2020. For more information, visit Follow Morningstar on Twitter @MorningstarInc. 

About Intentional Endowments Network (IEN)

The Intentional Endowments Network is a peer learning network of colleges, universities, and other mission-driven institutional investors working together to achieve their risk and return objectives through investment actions that create a thriving, sustainable economy. IEN has more than 165 network members including endowments, asset managers, investment consultants, nonprofit partners and individuals. Learn more at 

About the Interfaith Center on Corporate Responsibility (ICCR)

Celebrating its 49th year, ICCR is the pioneer coalition of shareholder advocates who view the management of their investments as a catalyst for social change. Its 300 member organizations comprise faith communities, socially responsible asset managers, unions, pensions, NGOs and other socially responsible investors with combined assets of over $500 billion. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. Visit our website and follow us on Twitter, LinkedIn and Facebook.