Overwhelming Opposition from Investor Organizations and Investment Firms to Department of Labor Proxy Voting Proposal

New analysis of Department of Labor's proxy voting rulemaking comments show overwhelming opposition.

WASHINGTON, D.C., Nov. 20, 2020 – Several investor organizations and investment firms today released an analysis of the public comment letters on the Department of Labor's (DOL) proposed rulemaking on the proxy voting by fiduciaries of ERISA-governed retirement plans. There is overwhelming opposition to the “Fiduciary Duties Regarding Proxy Voting and Shareholder Rights” proposal.

A total of 318 comment letters were submitted during the 30-day comment period that ended on July 30, including several petition letters signed by thousands of individuals. More than a third of the comments originated from investors, investment managers and the financial services industry, the majority of whom overwhelmingly opposed the proposal:

·        96% of asset managers and investment advisers;

·        97% of investor organizations, multiemployer plans and labor unions; and

·        91% of financial services providers opposed the rule.

·        Excluding comment letters from individuals, nearly 70% of all commenters opposed the rule.

Participating organizations in the categorization and analysis of public comments include US SIF: The Forum for Sustainable and Responsible Investment, Ceres, 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.

US SIF: “Proxy voting is one of the most visible and verifiable ways in which investors can practice responsible ownership and the DOL proposal is trying to take this away.  A vast majority of public commenters disagree with the DOL,” said Lisa Woll, CEO of US SIF: The Forum for Sustainable and Responsible Investment. “DOL's proposal can easily be understood as departmental preference that companies shouldn't be bothered by shareowners. This is assuredly not the role of the Department of Labor.”

Ceres: “At a time when the Federal Reserve warns that climate change is a risk to U.S. financial stability and more institutional investors seek material information and disclosures through filing climate shareholder proposals, it is unconscionable that the federal Department of Labor is casting doubt on their right to do so,” said the Rev. Kirsten Snow Spalding, senior program director of the Investor Network at Ceres. “As proposed, this rule making will jeopardize fund managers' ability to fulfill their fiduciary duties, and thus pose material financial risk to their retirement plan beneficiaries.”

Impax Asset Management LLC: “This draft rule is deeply flawed, in that one of its permitted practices is to always vote with management.  The presumption that management is always right is inappropriate,” said Julie Gorte, senior vice president, sustainable investing at Impax Asset Management LLC. “While management does often make good decisions, there is a lengthy record of poor decision making and corporate bankruptcies that makes this permitted practice a dubious call, and one not always compatible with fiduciary duty.”

Morningstar: “This proposal is out of step with the realities of investor stewardship.  It places unnecessary limitations on plans' voting entitlements and therefore limits plan sponsors' ability to represent the long-term financial interests of beneficiaries,” said Jon Hale, head of sustainability research for the Americas at Morningstar.


US SIF: The Forum for Sustainable and Responsible Investment is the leading voice advancing sustainable investing across all asset classes. US SIF members, comprised of investment management and advisory firms, mutual fund companies, asset owners, research and data firms, financial planners, advisors and broker-dealers, represent more than $3tn in assets under management or advisement. US SIF members integrate environmental, social and governance factors ("ESG") into their investment decisions and take their responsibilities seriously as shareowners, including voting proxies and engaging with companies.

Ceres is a nonprofit organization working with institutional investors and companies to build sustainability leadership and drive solutions throughout the economy. Ceres supports the Investor Network on Climate Risk and Sustainability, which consists of over 175 institutional investors managing more than $30tn in assets, who advance leading investment practices, corporate engagement strategies, and policy and regulatory solutions to address sustainability risks and opportunities. Ceres has worked closely with institutional investors since our founding in 1989, and with an expanding group of investors since the founding of our Investor Network 17 years ago.

Impax Asset Management LLC, the North American division of Impax Asset Management Group and investment adviser to Pax World Funds. Impax Asset Management manages and advises on more than $5.5bn in assets under management (AUM). Impax offers listed and private equity strategies to institutional clients. It has a long track record as a pioneer in sustainable investing.

Morningstar Research Services, LLC offers retirement plan, asset management, and financial advisory services. Morningstar is a leading provider of independent investment research and the world's largest provider of mutual fund data and ratings. Morningstar has a long history of advocating for transparency in global financial markets.