Secretary of Labor nominee Marty Walsh has concerns about two recent rule-makings finalized under the Trump administration and, if confirmed, will instruct the Employee Benefits Security Administration to re-examine the rules.
In a written response to a question posed by Sen. Patty Murray, D-Wash., chairwoman of the Senate Health, Education, Labor and Pensions Committee, Mr. Walsh, the mayor of Boston since 2014, took issue with the Labor Department's newly effective "Financial Factors in Selecting Plan Investments" and proxy voting rules. The rules were finalized in November and December, respectively, and became effective days before the Biden administration took office.
The financial factors rule stipulates that ERISA plan fiduciaries cannot invest in "non-pecuniary" vehicles that sacrifice investment returns or take on additional risk. It's commonly referred to as the ESG rule, though its final version focuses less on ESG than the proposal on which it was based.
The proxy voting rule provides a regulatory framework for plan fiduciaries to follow when they exercise shareholder rights, including proxy voting, and select and monitor proxy advisory firms.
"I am especially concerned that the recent rules could make it harder for plans to make investment decisions based on ESG factors, even when those factors are related to the economic wellbeing of plans and their participants," Mr. Walsh said in his written response. "Given ERISA's overarching goal of protecting plans and their participants, that is reason enough to review the rule-makings."
On his first day in office, Mr. Biden signed an executive order directing departments and agencies to review certain regulations put in place by the Trump administration that conflict with his objective to restore "science to tackle the climate crisis."
The lone Labor Department rule up for review is its financial factors rule.
Retirement issues weren't a focus for Mr. Walsh or committee members during his Feb. 4 confirmation hearing before the Senate HELP Committee. But Ms. Murray followed up with written questions after the hearing and Mr. Walsh responded before the committee voted on his nomination Feb. 11, approving it in an 18-4 vote.
Mr. Walsh's nomination now heads to the full Senate. A vote there has not yet been scheduled.
